A wave of new banks is about to shake up a normally staid industry

• Key insight: A spike in bank charter applications from organizations with nontraditional business models is about to shake up a typically boring industry. One common thread appears to be a desire to avoid direct regulation by the Federal Reserve.
• Supporting data: On an applications-per-year basis, chartering activity under the second Trump administration has doubled relative to Trump I, and is up about 5x versus the average rate from 2010 to 2016.

Banking has long had a well-deserved reputation as a boring business. Over the past two years, however, media and investor attention has surged, with a focus on a presumed wave of new banks sporting nontraditional and varied business models. The approach of the midterm elections is an opportunity to take stock of what has really changed, based on my organization's database of bank charter applications submitted between January 2025 and Oct. 13, 2026.

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TL;DR: The banking industry is undergoing a fundamental sea change. 

Applications for new bank charters have surged dramatically. On an applications-per-year basis, chartering activity under the second Trump administration has doubled relative to Trump I, and is up about 5x versus the average rate from 2010 to 2016. (Perhaps surprisingly, the pace of applications under Biden was roughly the same as under Trump I.) New regulatory attitudes seem to have coincided with the maturation of many nonbanks to the point where the benefits of controlling a bank outweigh the costs and burdens.

Not only is new bank formation booming, but this wave of new banks involves differentiated and innovative business models. For decades, most bank charter applications involved standard charters and traditional community banking business models. From 2010 through 2024, more than 80% of applications were for standard state or national insured bank charters. Under Trump II, more than two-thirds of applications involve nontraditional business models and/or nontraditional charters (industrial bank, credit card special purpose bank, or uninsured national trust bank). 

Where new bank formation is focused has also shifted. Historically, about two-thirds of new bank charter applications involved state charters. Under Trump II, that proportion has flipped, with nearly 60% of applications seeking a national charter. In part, that surge likely reflects the OCC's positive orientation to new bank formation. But the growing preference for national charters also reflects a more durable change in their value relative to state charters: Only national banks enjoy preemption of state laws and have the power to export home-state interest rates nationwide even if a state has "opted out." Expect the preponderance of new bank charter applications to involve national charters for the foreseeable future.

Corporate structure is shifting materially as well. Bank holding companies, regulated by the Federal Reserve, have been the predominant structure for U.S. banks. Fewer than 1% of existing banks operate under a charter that is exempt from the Bank Holding Company Act, and more than 80% operate within a regulated holding company (rather than a structure in which investors own the bank directly). Under Trump II, a stunning 55% of proposed new banks are structurally exempt from the Bank Holding Company Act and another 20% or more are being structured without a holding company (Erebor Bank is a prominent example of this approach). 

Applying for a new bank is an important milestone, but the industry will only be affected if and as these applications are approved by regulators. The picture here has shifted significantly in favor of applicants, but remains wildly uneven across federal banking agencies. 

Read more:

• Fintechs asking for, and receiving, bank charters in 2026
• The next phase of Trump's banking reforms won't be so easy
• Fed's Warsh to look beyond interest rates over next 100 days
• What banks can learn from Fincen's penalty against BofA

Federal regulators are in fact moving dramatically more quickly on applications for new banks. During Trump I, the average time from a bank charter application to an approval was 200 days, outside the statutory target of 120 days. Under Biden, the regulatory review period jumped to 314 days. Under Trump II, the review period has already been reduced to 145 days for 2026 applications. The OCC is moving faster than the FDIC so far, though the latter has recently adopted a revised approach that could accelerate its reviews. 
Approval rates for new banks are up significantly as well. Under both Trump I and Biden, approximately 56% of applications for new banks were approved. Under Trump II to date (and excluding applications that are still pending), 87% of applications have been approved.

There have been zero applications for new state-chartered member banks (where the Federal Reserve serves as the primary federal regulator), so there is no direct data. But the Federal Reserve must approve new bank holding companies (where the bank is not exempt and investors elect not to own the bank directly). So far, this picture to date is far less encouraging. Of 12 recent applications for a new bank holding company in connection with a fintech forming a new bank, only a single application has been approved to date (and that approval required 349 days). 

What does all this mean for banking? A lot. First, a wave of new banks is indeed on its way, bringing a welcome boost in diversity and dynamism for an industry that has been operating in a bit of a one-size-fits-all straitjacket. Not all of these new banks will ultimately be successful, but the impact for consumers and businesses will be positive (including by nudging established banks to be more innovative and competitive).

Second, the central role of the Federal Reserve in supervising the banking industry is being directly challenged. Absent significant legislation, bank holding companies and the Fed's critical role won't go away for established traditional banks. But organizers of new banks are clearly voting with their feet. We should expect future new bank applicants to continue to favor approaches that avoid the Fed where possible. As a consequence, while the Fed seems likely to retain its central role among traditional banks, it seems on track to have a smaller role in overseeing or fostering bank innovation and change. 

Finally, the clear preference among these new banks to avoid bank holding companies and the Federal Reserve raises important questions about the boundary, if indeed there is one, between banking and commerce. Most banks cannot be owned by a company that isn't largely financial in character. But any company in any business can own a bank charter that is exempt from the Bank Holding Company Act. The broad appeal of these nontraditional charter types will likely continue to blur that line.