What Bank Does Upgrade Use for Its Services?

Upgrade is a financial technology (fintech) company that offers a range of financial products to consumers, including personal loans, credit cards, and checking and savings accounts. Like many companies in the fintech sector, Upgrade does not operate as a traditional bank itself. Instead, it collaborates with federally regulated banking institutions to provide its services. This partnership model allows Upgrade to focus on its technological innovations while leveraging the regulated infrastructure of established banks.

Upgrade’s Business Model as a Fintech Platform

Upgrade functions primarily as a technology platform, connecting consumers with various financial products. The company utilizes its technology for processes such as loan origination, credit assessment, and managing customer service interactions. This approach allows for streamlined digital experiences, making financial services more accessible. While Upgrade develops the user-facing platform and manages the customer relationship, it relies on its chartered bank partners for core banking functions. These functions include funding and servicing loans, holding customer deposits, and ensuring adherence to complex banking regulations. This strategic collaboration enables Upgrade to offer a broad suite of financial products without the extensive regulatory and capital requirements of a full-fledged bank.

Key Partner Banks Used by Upgrade

Upgrade partners with several banks to deliver its financial products. Cross River Bank is a primary partner for personal loans, auto refinance loans, and home improvement loans, and also issues Upgrade Visa® Cards, which provide access to personal credit lines, and provides banking services for Upgrade’s checking and savings accounts. Blue Ridge Bank, N.A. is another partner for personal loans and auto refinance loans. Also, Sutton Bank previously issued Upgrade Visa® Cards through October 2024, and The Bancorp Bank, N.A. also issues Upgrade Visa® Cards. Upgrade maintains relationships with over 200 financial institutions, including credit unions, which often purchase loans facilitated through its platform.

Role of Partner Banks in Upgrade’s Services

Partner banks serve essential functions in Upgrade’s operational framework, providing the regulated backbone for its fintech offerings, with a primary role involving lending where banks originate and fund loans Upgrade facilitates through its platform. This ensures loans are issued by a regulated entity, adhering to established lending practices. For deposit products, such as checking and savings accounts, partner banks are members of the Federal Deposit Insurance Corporation (FDIC), which provides deposit insurance, protecting customer funds up to $250,000 per depositor, per insured bank, for each account ownership category. This federal backing offers security for customer deposits, which Upgrade itself does not directly insure as it is not a bank. Additionally, these regulated institutions ensure Upgrade’s services comply with various banking laws and regulations, including those enforced by agencies like the Federal Reserve and the Consumer Financial Protection Bureau (CFPB). Banks also contribute balance sheet capacity and infrastructure to support the volume of lending and deposit services offered through the Upgrade platform.

Customer Implications of Bank Partnerships

For the end-user, Upgrade’s bank partnership model has direct implications for their financial products, as when a customer obtains a loan through Upgrade, the loan is formally originated by the partner bank. The loan agreement is ultimately with that banking institution, not Upgrade directly. This distinction is important for understanding the legal and regulatory framework governing the loan. For deposit accounts like checking and savings, the funds are held at the partner bank, which provides FDIC insurance protection up to $250,000 per depositor, per insured bank. For customer service and dispute resolution, interactions might involve both Upgrade for platform issues and the specific partner bank for loan servicing or account management.