PayPal applies to form bank that can offer small business loans and savings accounts
PayPal has applied for regulatory approval to establish PayPal Bank, which aims to provide small business loans and interest-bearing savings accounts, enhancing its service offerings amid a competitive fintech landscape. CEO Alex Chriss emphasized that this move is intended to bolster the company's efficiency and support small business growth across the U.S. The application will be reviewed by the U.S. Federal Deposit Insurance Corporation and the Utah Department of Financial Institutions. While PayPal experienced a 7% revenue increase year-over-year, its stock has significantly declined in 2025, contrasting with broader market gains. The initiative reflects PayPal's strategy to expand its banking-like services as digital financial offerings proliferate.
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PayPal's application to form a bank includes plans to offer loans specifically targeted at small businesses, which the company believes will enhance its market position.
CEO Alex Chriss indicated that establishing PayPal Bank is part of a broader strategy to improve efficiency and support economic opportunities.
The regulatory review will be conducted by the U.S. Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions, which could take several months.
PayPal also intends to offer interest-bearing savings accounts, a move that aligns with its efforts to diversify its financial service offerings.
Despite a 7% year-over-year revenue increase reported in October, PayPal's stock has faced a decline of about 29% in 2025, contrasting with the S&P 500's 16% gain.
The announcement resulted in a 1.5% rise in PayPal's shares during extended trading, indicating a positive market reaction to the news.
The initiative is seen as a response to increasing competition from fintech companies that are encroaching on traditional banking services.