Why be a bank?

Robert O’Hare has spent more than 20 years working in finance, including positions at Square and Pandora. For much of the last decade, he’s been a CFO. He joined publicly held Affirm as SVP of finance in 2020 and stepped up to the CFO role almost two years ago.

A buy-now-pay-later company, Affirm is part of a wave of fintechs once thought to be challengers to traditional banks that are trying to elbow their way into some traditional banking territories. They’re not all trying to be the same flavor of financial services firm, however; the fintechs seeking banking-hood are doing so for varied reasons. Earlier this year, Coinbase, for example, got conditional approval from the Office of the Comptroller of the Currency for a b national trust charter for its digital asset custody business, and in 2025, the state of Georgia granted Stripe a specialized payment-services license. In September, Chime, one of the more well-known fintechs, announced an agreement to buy Oklahoma’s Stride Bank, founded in 1913.

In January, Affirm applied to regulators to establish Affirm Bank, a Nevada-based industrial loan company. We asked O’Hare a simple question: Why does Affirm want to be a bank?

Won’t being a bank make you more regulated?

We’re pursuing an industrial loan company charter, and it will allow us to gather deposits and use those deposits to fund our business. That is really what’s interesting about being a bank. It’s important to remember that we’re creating a bank subsidiary. Affirm itself would not become a bank holding company, and we’re not pursuing that path. We’re looking to bring depository funding into the fold…And it feels like a good time to pursue that now that we’ve become sustainably profitable, and we think we’re a really strong candidate for a charter.

We would be more regulated, sure, yes. We’ve developed what we think is a pretty thoughtful business plan for the bank subsidiary, and want to make sure that we operate within the parameters outlined in that business plan. So yes, we would have a more regulated subsidiary, and we’re bringing in a new management team to help guide the bank subsidiary in its inception here. There would be more regulation overall. It’s a spectrum in terms of the different types of charters that are available to fintechs and the level of regulation that comes with each.

The Federal Reserve raised rates in September. Will this have any impact on the company?

In the short run, in the medium term, [a] 25 basis point increase is not a huge headwind to us as a business. Most of our debt is fixed-rate in nature, meaning that an increase in rates doesn’t actually change our cost of borrowing. So again, not really a headwind for us today, necessarily. We’re operating very, very profitably. We’ve given some medium-term targets around where we want our loan economics to be. We’re actually operating above those and sort of expect to operate above them for the remainder of this fiscal year, at least.

How about other macroeconomic issues like tariffs or the war in Iran? How is that impacting you?

Because the loans that we create are so short term in nature [the average Affirm loan has a 12-month term], we get such an important signal around the health of the consumer with every repayment event…And right now, we’re seeing the credit outcomes for existing loans, for loans that are brand new, we’re seeing those credit outcomes line up with our expectations, and that tells us that our underwriting is working. It’s doing what it’s supposed to do, and it tells us that we have the right aperture in terms of the number of approvals or declinations that we’re driving in our business. I think we get the benefit because the loan book turns over so quickly, and there’s so much velocity of repayment in our loans. We get the benefit of using our data first. Of course, we have to be macro aware, and so we’re tracking all of the macro events and KPIs too, and are ever-vigilant in terms of the health of our consumer. But really, our analysis starts with our internal data, and right now we’re not seeing signs of stress with our borrower.