When It Comes To Banking, Utah Takes Center Stage

As Utah’s largest and fastest-growing key industry, the financial services sector plays an essential role in the state’s robust economy. The industry includes commercial and industrial banks, credit unions, fintech, insurance enterprises, and other financial service businesses.

“Utah is already at the forefront of innovation in financial services. We welcome new ideas, collaboration, and partnerships — they thrive here,” said Howard Headlee, president of the Utah Bankers Association.

Utah is one of the nation’s top states for financial services employment, with an employee base of over 84,000 people. The industry has realized significant employment growth over the past several years, and the trend is expected to continue. According to JobsEQ, the Salt Lake City metropolitan area saw a 10-year historical growth rate of 30% with a four-year projected growth rate of 6%.

Utah and National Financial Policy

From early on, Utah has had a profound effect on national monetary and banking policy. Utah’s own Marriner S. Eccles served as Chairman of the Federal Reserve under President Franklin D. Roosevelt and advocated for long-term financial solutions and protections, including federal insurance for banks, a centralized Federal Reserve System, tax reforms, a minimum wage, and governmental regulation of the stock market. Eccles influenced how the government can use money to control the economy. He argued for deficit spending during the Great Depression and pushed for a balanced budget during World War II.

Fintech and Industrial Banks

One pinnacle of Utah’s strength in the financial services sector is the industrial bank segment, which has been part of the state’s economy for 110 years. Today, Utah is the nationwide center for this banking sector.

In March 2020, two new industrial banks, Nelnet Bank and Square Inc., received approval from the Federal Deposit Insurance Corporation (FDIC) and state of Utah, and were granted industrial bank charters. They are the first newly chartered industrial banks in over a decade.

Nelnet Bank launched in early November, providing student loan refinancing with plans to offer students private loan options.

“We’re excited to help students and families meet their education goals by providing lending products that are innovative and customerfocused,” said Andrea Moss, Nelnet Bank CEO. “Being the first industrial-chartered bank established since 2008 provides us the ability to serve the changing needs of the higher education market.”

Square Financial Services is expected to launch in 2021 and will act as a subsidiary of Square Inc., a financial services and mobile payment company based in San Francisco, Calif. According to a Kem C. Gardner Policy Institute report, at year-end 2019, Utah-chartered industrial banks held $140.6 billion in assets, representing 93.5% of total assets held by industrial banks in the United States. The state’s industrial banks funded $1 billion in loans, investments, and donations to support lower-income communities in Utah and other states, especially with affordable housing.

Growing Banking Industry

Utah is also home to 10 prominent banks that left the industrial bank sector between 2004 and 2018, and now operate under commercial bank charters. These former industrial banks further boost the economy and provide more than 4,600 jobs and $315 million in employee and self-employment earnings.

By combining history with innovation, Utah continues to leave its mark on the financial services industry.