3 Reasons Opening a Bank Is a Great Idea for Square Inc
One of the secrets to Square Inc's (NYSE: SQ) success has been its remarkable ability to develop an ecosystem for small and medium-sized businesses that extends far beyond mere payment-processing capabilities. That ecosystem hinges in part on industry-specific solutions, like Square for Retail, an app that retailers can download and start using within minutes for a monthly fee. Another platform tailored for a specific industry is Caviar, a food-delivery and mobile order-ahead platform to which restaurants can subscribe. However, the most successful of Square's additional services is probably Square Capital, the platform through which Square offers its clients small-business loans.
The latest attempt by Square to expand its ecosystem builds upon the earlier success of Square Capital. Earlier this month, The Wall Street Journal reported (link requires subscription) that Square would soon apply for a bank charter in Utah for a new unit, Square Financial Services, that would offer loans to small and medium-sized businesses. As fellow Fool John Maxfield explains, if Square's request is approved, the new unit will not be a bank but, rather, an industrial loan company.
In what should be a winning move for investors, Square filed an application for a bank charter earlier this month. Image source: Square Inc.
Source: Fool.com