U.S. fintech firm Mercury's application for a national bank charter has received conditional approval from the Office of the Comptroller of the Currency (OCC).

Fintech outlet FinTech Futures reported on April 29 that the approval moves Mercury into the next stage of setting up its own bank, Mercury Bank.

Mercury secured the conditional approval 5 months after applying for a national bank charter in December last year. The company said it has entered the "bank organisation phase" and will continue consultations with regulators to meet the remaining requirements needed for a final charter approval and the launch of Mercury Bank.

The new bank will be headquartered in Utah. It will be led by Chief Executive Officer and president Jon Auxier (존 옥시어). Auxier joined Mercury in August last year as chief banking officer. He previously served as chief financial officer at SoFi Bank, and Mercury said he helped successfully lead SoFi's execution of its national bank charter.

Conditional approval alone does not guarantee the bank's launch. Mercury has also applied to the Federal Deposit Insurance Corp (FDIC) for federal deposit insurance as part of its national bank charter application. Mercury Technologies also plans to separately file an application with the Federal Reserve at a later date to convert into a bank holding company. Launching its own bank requires completing procedures in sequence for each supervising authority.

Mercury said that once its banking business is fully operating it will be able to offer customers functions it cannot currently provide. It cited direct account integration with Zelle, a digital payments network that supports person-to-person transfers and business payments. It also said it will expand its loan products for businesses and individuals and provide deeper payments infrastructure that supports faster fund transfers and direct control over payment processing methods.

The plan also ties into Mercury's partner-bank operating model to date. Founded in 2017, Mercury currently provides business and personal accounts to more than 300,000 customers in the United States by using Choice Financial Group and Column, an infrastructure bank. The company said it will continue its existing partner-bank system while preparing the new institution. That means it will maintain its current business while launching the new bank during the period of building infrastructure and organisation.

The business has also reached a certain scale. The company said its annualised revenue is about $650 million and that it has recorded profits under U.S. accounting standards for 4 consecutive years. The performance is linked to the rationale for changing its operating structure by establishing its own bank, rather than simply expanding services.

Mercury also maintains its investment base. It is backed by Sequoia Capital, Spark Capital, Marathon, Coatue, CRV and Andreessen Horowitz, among others. The company said it was valued at $3.5 billion during its $300 million Series C funding round in March last year.

Mercury's conditional approval extends a trend of fintech firms seeking direct bank licences beyond the partner-bank model. With a number of steps remaining before a final charter approval, including deposit insurance and holding company approval, the timing of Mercury Bank's launch depends on how quickly it meets regulatory requirements.