PayPal to Establish a Bank: Breaking Away from Being a 'Payment Processor' and the Second Growth Curve Envisioned by Fintech

On December 15, 2025, PayPal Holdings, Inc. (hereinafter, PayPal) formally filed an application with the Utah Department of Financial Institutions (UDFI) and the Federal Deposit Insurance Corporation (FDIC) to establish "PayPal Bank" as an Industrial Loan Company (ILC). This move is not merely a regulatory procedure; it marks a decisive strategic turning point for the company, which has functioned as a payment processor for the past 25 years, to internalize deposit and lending functions and evolve into a true "financial ecosystem."

This report provides a detailed analysis of PayPal's bank establishment application, the structural challenges in small and medium-sized business (SMB) finance behind it, the transformation of its business model, the changes in the regulatory environment under the (second) Trump administration, and the impact on investors.

As a result of the analysis, the following key insights were obtained: