The U.S. Office of the Comptroller of the Currency (OCC) has granted conditional approval to lending and fintech company SoFi to receive a national bank charter, a designation that will allow it to receive deposits and make loans on its own.

Currently, SoFi licenses the charter from another bank to provide the legal backstop for its operation—a model used by many so-called challenger banks such as Chime, but one that undercuts its profits.

The process of obtaining a national bank charter is slow and costly, but is one to which other financial upstarts are turning. Online bank Varo received one in August while payment giant Square is in the process of obtaining one too.

For SoFi, which first made its name refinancing the student loans of lawyers and other high-earning professionals, the bank charter is part of a larger strategy to become a full-service financial institution. The company now offers everything from cryptocurrency to fraction shares of stock, and on October 28 announced a credit card offering 2% back on purchases.

SoFi also appears to be on more stable footing than it was in 2018 when it endured a near crack-up following the departure of its founder amid a sexual harassment scandal and shrinking profits from its student-loan business. Since then, it has diversified its product offerings and obtained an important new revenue stream through the $1.2 billion acquisition of Galileo, a company that provides back-end services to many other digital banks.

SoFi's conditional acquisition of a bank charter also comes as many challenger banks face headwinds amid fierce competition and a low interest rate environment—a situation that some analysts predict will result in consolidation or some banks simply disappearing.

While the OCC's approval effectively paves the way for SoFi to become a national bank, the company must still wait for formal approval from the Federal Deposit Insurance Corporation and the Federal Reserve.

“We look forward to continuing to work with the OCC on the next steps of the application process, along with the Fed and FDIC," said a SoFi spokesperson.