Affirm Seeks Banking Charter as Capital One Moves to Acquire Brex in Fintech Consolidation Wave

Affirm Seeks Banking Charter as Capital One Moves to Acquire Brex in Fintech Consolidation Wave

Buy-now-pay-later lender Affirm has applied for an industrial loan company charter, marking the latest attempt by a fintech firm to secure direct banking powers, while Capital One announced plans to acquire corporate card and expense management startup Brex, according to a fintech industry podcast published this week.

The dual developments signal a continued reshaping of the fintech landscape as established players seek regulatory legitimacy and traditional banks hunt for technology-driven growth. For finance chiefs, the moves raise questions about the stability of vendor relationships and the long-term viability of standalone fintech business models.

Affirm's pursuit of an ILC charter would allow the company to take deposits and make loans without the full regulatory burden of a traditional bank charter. The structure has become a popular vehicle for fintech firms seeking banking powers—think Nelnet and BMW's financial services arms—though applications have faced increasing scrutiny from regulators in recent years. (An ILC charter is, essentially, a bank charter with training wheels: you get to do banking stuff, but you don't have to join the Federal Reserve System or deal with quite as much supervision. State regulators love them. Federal regulators are... less enthusiastic.)

The Capital One-Brex deal, meanwhile, represents a bet by the credit card giant that corporate expense management represents a growth opportunity worth acquiring rather than building. Brex, which launched in 2017 targeting startups with corporate cards that didn't require personal guarantees, has evolved into a broader spend management platform competing with the likes of Ramp and Divvy.

The podcast episode, featuring fintech analysts Jason Mikula and Alex Johnson, also touched on brewing legislative battles that could reshape the payments industry. Proposals for a 10% credit card interest rate cap and the re-emergence of the Credit Card Competition Act—which would require banks to offer merchants routing choices beyond Visa and MasterCard networks—are circulating in Washington. The analysts suggested these proposals might serve as "bargaining chips" rather than serious legislative efforts, though the threat alone could influence industry behavior.

Perhaps most notably for crypto-focused finance teams, Coinbase CEO Brian Armstrong has apparently reversed course on crypto market structure legislation he previously supported. The podcast described this as Armstrong "rug pulling" the legislative effort, using crypto slang for abandoning a project—a development that could complicate efforts to establish clearer regulatory frameworks for digital assets.

The question for CFOs evaluating fintech partnerships: if Affirm needs a banking charter to stabilize its business model, and if Brex's exit strategy involves acquisition by a traditional bank, what does that say about the "disruption" narrative? The fintech-to-bank pipeline is starting to look less like revolution and more like a very expensive job application process.

The ILC charter application, in particular, bears watching. Affirm's move suggests the company sees regulatory legitimacy as essential for its next phase of growth—or that investors are demanding it. Either way, it's a tacit admission that being a "tech company that does lending" only works until it doesn't.