Flex bank charter bid would put rent payments inside regulated bank

Flex has applied for a Flex bank charter in Utah, seeking to create a state-chartered industrial bank that would support its rent-splitting product and other credit offerings. The company said Friday that it filed applications with the Federal Deposit Insurance Corporation and the Utah Department of Financial Institutions to form Flex Bank.

The proposed subsidiary would issue Flex Rent and Flex’s other credit products directly, according to the company. Flex said the bank would also give customers access to FDIC-insured deposit accounts and operate across the United States through digital channels.

Flex Rent allows renters to divide large recurring housing payments into smaller installments. The company said it has processed $40 billion in rent payments for 3.2 million renters in the United States since 2019.

What would a Flex bank charter do?

A bank charter would give Flex a regulated banking subsidiary through which it could offer credit products and insured deposit accounts directly, subject to state and federal bank oversight. Flex said the structure would place its products on a foundation that includes FDIC insurance and bank regulatory supervision.

Shragie Lichtenstein, Flex’s co-founder and chief executive, said in the company’s release that rent is often households’ largest bill and does not always align with how renters receive income. “This charter gives us a permanent, regulated foundation to keep closing that gap,” Lichtenstein said.

Industrial bank charters have become a route of interest for some financial technology firms seeking to bring specific financial activities within a licensed banking entity. PYMNTS reported in March that new charter applications have been increasing as FinTech companies look for licenses tied to defined banking functions.

PYMNTS also reported on July 6 that interest in de novo bank charters has picked up after several quieter years. That report cited June guidance from the Office of the Comptroller of the Currency that sought to clarify licensing standards, along with signs that federal regulators were again willing to consider applications individually.

How Flex has expanded its rent payment reach

Flex has built distribution through partnerships with property technology and management software companies. In October, the company announced a partnership with AppFolio that made Flex Rent available to AppFolio property manager customers, allowing residents to split monthly rent payments through their online portal.

Flex has also announced partnerships with Entrata, RealPage and Yardi, companies that provide operating systems or software to the multifamily and property management sectors. Those integrations place Flex’s payment product inside systems used by landlords and property managers to collect rent.

The charter application, if approved by the FDIC and Utah regulators, would add a banking subsidiary to that distribution model. Flex said Flex Bank would be based on digital channels and would support the company’s effort to broaden access to flexible payment products for large essential bills.

This story draws on original reporting from PYMNTS.