Rakuten refiles with FDIC for ILC charter

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Two months after Rakuten withdrew its bid for a banking charter in the United States, the Japanese e-commerce giant has resubmitted its application to the Federal Deposit Insurance Corp.

Rakuten, which operates in the U.S. as a shopper rewards program and has built an online banking and credit card empire in Asia, revised its application to become an industrial loan company after receiving feedback from the FDIC, a company spokesperson said Friday. Rakuten also has an application pending with the Utah Department of Financial Institutions for an ILC charter; federal and state approval are necessary in this case.

“Rakuten Bank America is confident that the revised application is stronger and is responsive to the FDIC’s feedback,” the spokesperson said in an emailed statement.

Rakuten first applied in July 2019. It is one of a growing number of fintech companies trying to gain entry into the regulated banking sector. Financial industry groups have opposed Rakuten’s application out of concern that the company is trying to cross the traditional boundaries separating banking and commerce, but ILCs generally argue the groups are opposed to new competitors.

If the application were to be approved, Rakuten would enjoy an FDIC guarantee on its deposits but would avoid certain bank holding company requirements.

The FDIC approved ILC applications from the payments firm Square and the student loan servicer Nelnet in March. The agency said at the time that both companies would have to meet capital requirements that are much higher than traditional FDIC-insured banks.

“Rakuten Bank America is committed to transparency with our constituents and to cooperating with federal and state agencies during the regulatory review process, and we look forward to serving our customers where they are — online,” the company’s spokesperson said.

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Nonbank ILCs Deposit insurance FDIC