The number of Federal Aviation Administration licensed commercial space operations, including launches and reentries, has soared over the past decade, rising from just 14 in 2015 to a record 148 in 2024. This rapid growth in licensing, driven by innovation and new entrants, echoes a similar trend now unfolding in the banking sector as applications for new bank charters increase.A Charter Boom That Looks DifferentAs regulatory attitudes toward innovation in banking have shifted under the current administration, applications for banking charters have surged, with many applicants being nontraditional banking players. According to S&P Global, 31 organizations sought licenses in 2025 for national trust bank charters, full-service commercial bank charters, and industrial loan company (ILC) charters. Who are these applicants? What operating models are they pursuing? What, if anything, should community financial institutions (CFIs) do in response? A closer look at this new wave of charter applicants highlights the operating models emerging in the market — and offers several practical considerations for CFIs preparing for what could become a meaningful shift in the competitive landscape.Who’s Actually Applying for Bank Charters?Applications have come from a wide range of organizations that broadly fall into four groups:
- Large corporations/auto companies. Groups such as Ford and General Motors are pursuing ILC charters to lower the cost of funding for large-scale consumer finance programs.
- Fintech and payments platforms. Firms such as PayPal and Revolut are seeking bank charters to move beyond sponsor-bank partnerships and gain control of the full banking stack.
- Digital asset and crypto firms. Organizations such as World Liberty Financial — the Trump family’s crypto venture — have applied for a national trust bank charter to provide digital asset custody and stablecoin conversion services.
- Niche digital banks. Some applicants, such as Erebor Bank, are pursuing full commercial bank charters to build sector-focused digital banks offering specialized lending and banking services.
How These Charters Affect the Community Banking LandscapeAgainst this backdrop, the number of traditional community banks continues to decline. By the end of 2025, there were 3,909 community banks in operation, a net loss of 137 institutions over the year, with mergers and acquisitions accounting for the majority of the decrease. This long-running consolidation highlights some of the key challenges smaller, locally focused banks face in scaling and competing in today’s financial landscape. Most of the new charter applicants are national, digital-first platforms with narrow, product-focused models, covering areas such as payments, auto lending, digital asset custody, or high-yield online deposits. They are typically branchless and rely heavily on technology and centralized operations. By contrast, community banks operate local branch networks, offer a broad range of banking services, and maintain local governance and close customer relationships.Over the next three to five years, these differences mean that CFIs are unlikely to face a wave of new competitors on Main Street. Instead, competition is more likely to emerge in specific products or verticals where these new charter holders operate most efficiently, such as online deposits, auto finance, and payments.How CFIs Can Position ThemselvesAlthough the competitive pressure is likely to be selective, CFIs can take several practical steps to remain well-positioned as new charter holders enter the market.
- Develop a strategy for areas of overlap. Having identified which lines of business are most exposed, CFIs should consider how best they can compete. Their deep local knowledge and strong advice-based relationships give them an edge. By combining their relationship-driven model with selective innovation, CFIs can defend their markets while capturing new opportunities in the areas where competition is most intense.
- Communicate your value proposition clearly. With new entrants disrupting the financial landscape, CFIs need to communicate their value clearly. Emphasize local decision-making, personalized advice, and long-term stability in messaging. Provide front-line staff with simple talking points so they can confidently address customer questions about new competitors, reinforcing why your institution remains the trusted choice.
- Review partnership strategy regularly. Regulators granting charters to nontraditional models signal that expectations around technology, risk, and partnerships are evolving. CFIs should monitor charter activity in their region and stay open to fintech or platform partnerships, rather than automatically treating these entrants as competitors. This approach helps institutions adapt strategically while leveraging new opportunities.
Key Questions for the Board
- Where are we most exposed if a niche or nonbank-backed charter holder enters our market?
- Where are our competitive advantages hardest to replicate?
- Are there potential partners we should engage with before they appear as competitors?
- Do we have the agility to respond quickly to the threat of new entrants?
- Are there segments where we could proactively innovate instead of reacting?
The recent wave of charter applications reflects a changing banking landscape, but not one that directly replicates the traditional community bank model. Most new entrants are narrow, digital, and nationally focused rather than local branch-based competitors. For CFIs, the challenge is likely to be targeted competition in specific products, not wholesale disruption. Instead, institutions will need to play to their relationship strengths while adapting strategically where it matters most.
