Personal finance company SoFi Technologies has just received approval from the Federal Reserve and the Office of the Comptroller of the Currency to become a bank holding company. Shares of the company surged by more than 16% in after-hours trading Tuesday after it announced the approval of its bank charter license.

The fintech company is now one step closer to becoming a national bank. SoFi currently operates as a mobile-first finance company, offering consumers traditional banking products such as cash accounts, debit cards, and loans.

However, the company isn't technically a bank as it still relies on FDIC-insured banks to handle its customer deposits and loans. The company primarily offers its products and services through its mobile app and online website.

Last year, SoFi announced plans to acquire California-based company Golden Pacific Bancorp. Through the acquisition, SoFi plans to operate a banking subsidiary called SoFi Bank. The company said it expects the deal to close by next month.

While formally entering the banking industry adds to the company's financial viability, it also adds to its regulatory scrutiny. SoFi takes a greater cut out of each transaction by taking away the middleman. SoFi CEO Anthony Noto said that by becoming a bank, SoFi consumers would soon have access to higher-yielding accounts, and it can also lend at much lower interest rates.

Noto, who was a former partner at Goldman Sachs and former COO at Twitter, said the national bank charter would allow the company to offer a broader suite of financial products to its customers.

Analysts at Mizuho expected the granting of the license to be well received by investors, particularly due to its potential earning benefits for the company. Analysts estimate that SoFi could recognize incremental adjusted earnings before interest, taxes, depreciation, and amortization of between $200 million and $300 million just by reducing its overhead costs.

SoFi has been working to acquire its bank charter license for the past three years. It started its application even before it considered acquiring Golden Pacific. The company was finally granted preliminary approval by the OCC back in October.

Last year, the fintech company went public through a merger with a special-purpose acquisition company run by venture capitalist Chamath Palihapitiya. The company's stock price has remained under pressure over the past few months as investors veer away from high-growth tech stocks. Since the start of the year, the company's share price has been down by around 23%. Its shares have declined by about 38% over the past three months.