Industrial Bank
Candlefocus EditorIndustrial banks mainly engage in consumer lending, usually comprising credit cards, installment loans, and consumer lines of credit. Corporate lending (generally in the form of working capital finance) is a minor part of an industrial bank's activities. Industrial banks may offer products and services such as remittances, payroll services, and financial products not available through traditional banking services.
The majority of industrial banks are chartered by Utah, with a few other states also offering their own charters. Currently, the total assets of industrial banks in the U.S. are significantly smaller than commercial banks, with external factors such as economic concerns and antitrust issues playing a role in their stagnant growth. Regulation of industrial banks differs from conventional banks due to their size and focus on consumer lending activities. The primary regulator of industrial banks is the state in which they are chartered and may be subject to additional regulations from the U.S. Treasury, Federal Deposit Insurance Corporation, and the Consumer Financial Protection Bureau, depending on the services the industrial bank provides.
Industrial banks have come under public scrutiny in recent years due to their lack of federal regulation. There has been some concern over the possibility of banks that operate outside traditional banking laws and regulations increasing the potential for risky lending. Many feel that these risks are mitigated by the additional regulation imposed by states and the measures taken to prevent unethical lending, such as having an individual or commercial firm own the bank and the required licensing of personnel.
Overall, industrial banks provide an interesting option for companies looking to provide banking services. Although their relatively limited size prevents them from dominating the banking landscape, industrial banks offer unique options for those not able to access traditional banking and financial products.