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Square Circles Traditional Banking Services 

In the connected economy, financial services ecosystems are being woven across all points of contact – across hardware, software, mobile devices – with a digital-first (and sometimes digital-only) focus.

To that end, as reported, Square is planning to expand its financial services offerings for its clients, with an eye toward introducing checking and savings accounts for small to mid-sized firms. It’s a bid, it seems, for Square to operate more like a traditional bank.

The plans are hinted at, according to reports, via lines of code that are embedded in an update to the company’s app for Apple devices such as the iPad and the iPhone. According to details via Bloomberg, the checking accounts will connect with businesses’ debit cards. The code hints that Square will charge roughly a half percent on savings accounts through at least this year – which would put that rate at a level competitive with digital banks.

One way the firm can offer these competitive rates is through Square Financial Services, which launched in March. The industrial bank, which operates as an independently governed subsidiary of Square, is headquartered in Utah. The stated purpose back then – and as is coming to practice now – is to offer business loans and deposits, with an initial push into underwriting and originating loans for the existing lending product (Square Capital).

Square Capital  

With a nod to Square Capital, management said in the latest round of earnings that Square Capital extended 136,000 loans in the first quarter, totaling $923 million, up 68 percent. On the earnings call, CEO Jack Dorsey noted that “we have a lot of experience, obviously, in lending … We do see a pretty incredible opportunity around lending to individuals. We are currently experimenting with that, with a small group of customers in small amounts … if someone went to a bank, they would be offered a minimum of $25,000 or $20,000, and … that’s way too much. They needed $5,000 to buy a new salon chair. So we really focus on … the actual needs.”

Dorsey is signaling, then, that the roadmap may be a straight line from companies to individuals. And it’s a sign of how a financial services ecosystem can be constructed around the (Square) seller and the individual who is used to using the Cash App (revenue from Capital and the Cash App came to $558 million in the period, up 88 percent year over year). Familiarity breeds new use cases, it seems, and Square seems to be banking on it – literally.

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