Lorum files for US national bank charter

Lorum argues that the correspondent banking system is broken because the wrong institutions are running it. Regional and fintech-forward banks are lending institutions that use client money to fund mortgage portfolios and loan books, meaning that “their incentive is to hold your money, not move it”.

Lorum says it was founded on a different premise: clearing, custody, cash management, and wholesale FX are fiduciary services, and should be run by an institution that holds client funds fully backed by cash and cash equivalents, with no lending book.

It has now filed an application with the Office of the Comptroller of the Currency for a national trust bank charter that would bring the operation under direct OCC supervision and enable Lorum to build direct participation in core US dollar clearing infrastructure.

The model is built around Named Account Custody, a structure that gives each account holder a legal and operational relationship to the custody framework, which Lorum says reduces the opacity and chain risk of nested clearing models.

George Davis, Co-Founder and CEO of Lorum, said: “The banks serving this market are lending out the money they are supposed to be moving. That is not a technology problem. It is a structural one. Named Account Custody was built to fix it: a legal and regulatory link to every account holder, with no intermediary chain and no lending book in the way. A national trust bank charter is how we deliver that at the scale the market needs.”