SoFi stock surges after passing last regulatory obstacle to become a bank.

• SoFi, a bank holding company based in San Francisco, received approval from its two primary regulators.
• The fintech's shares experienced a more than 16% increase in after-hours trading after the announcement.
• According to CEO Anthony Noto, this crucial step enables us to expand our comprehensive range of financial offerings, thereby enabling us to better support our members through significant financial events and the myriad of smaller moments that occur in between.

On Tuesday, shares of rallied more than 16% in after-hours trading after news broke that the fintech had cleared its final regulatory hurdle and become a bank.

SoFi, a San Francisco-based fintech company, has been approved by the Office of the Comptroller of the Currency and the Federal Reserve to become a bank holding company. Despite not being technically a bank, SoFi offers banking products such as loans, cash accounts, and debit cards. It partners with FDIC-insured banks to hold customer deposits and issue loans.

SoFi intends to acquire Golden Pacific Bancorp's community lender subsidiary and operate it as SoFi Bank, with the deal expected to close in February.

Obtaining an official banking license increases regulatory scrutiny but enhances the company's financial performance. By cutting out intermediaries, SoFi earns a larger share of each transaction. CEO Anthony Noto stated that a national bank charter would enable SoFi to offer competitive interest rates on loans and higher-yielding accounts to its customers.

Noto, a former partner at  and formerly chief operating officer at , stated that this crucial step enables us to expand our comprehensive range of financial products and services to better support our members during significant financial events and all the minor ones in between.

For over three years, SoFi has been seeking a bank charter from the Office of the Comptroller of the Currency. Prior to pursuing a bank acquisition, it submitted an application for the charter. In October, the OCC granted preliminary approval.

Last year, the company went public through a merger with a blank-check company run by venture capital investor Chamath Palihapitiya. However, shares have been under pressure this year as investors shift their focus away from high-growth tech companies. As of Tuesday's close, shares had fallen 23% for the year.