SALT LAKE CITY — You probably know Square as that little white credit card reader you can attach to your phone.
But Square, which is run by Twitter CEO Jack Dorsey, has expanded beyond the classic square — and has now even moved into the banking world. In fact, Square’s first bank will open in Utah, the company announced Wednesday.
Square’s application was conditionally approved by the Federal Deposit Insurance Corp. (which is one of two government agencies that offer deposit insurance to depositors in U.S. banks), and the company also received approval from the Utah Department of Financial Institutions.
Square will be launching the bank, called Square Financial Services, in 2021, and the institution will be supervised by the Federal Deposit Insurance Corp. and Utah’s Department of Financial Institutions.
“We appreciate the (Federal Deposit Insurance Corp.)’s thoughtful approach to our application, and their recognition that Square Capital is uniquely positioned to build a bridge between the financial system and the underserved,” said Jacqueline Reses, executive chairwoman of the new bank, in a news release.
“We’re now focused on the work ahead to build out Square Financial Services and open our bank to small business customers.”
Square wants to provide loans and deposit products for small businesses, which have typically been ignored by larger and more traditional banking institutions. And they’re not alone. Many fintech companies are hoping to branch out into banking, and Varo Money was also recently approved by the Federal Deposit Insurance Corp. in February.
However, this may be a difficult time for Square, Forbes reported. The new coronavirus has pushed the economy into turmoil and small businesses are taking the brunt of that. The majority of Square’s customers are small business owners, and investors expect Square to “plummet along with its customers.”
“We would expect Square to be disproportionately impacted from a likely wide spread of COVID-19 in the United States,” the Wall Street firm Citi said.
But Square plans to continue to sell loans to third-party investors and does not expect its bank to “have a material impact on (the company’s) consolidated balance sheet in 2020,” nor its “consolidated total net revenues, gross profit, or adjusted EBITDA.”