With tougher capital requirements looming, a number of regionals including U.S. Bancorp, Huntington and Santander are using these new instruments to share risk with nonbank investors and lighten their capital load. Experts point out the pros and cons.

Despite tougher economic conditions, BNPL lenders are driving growth by expanding to new audiences and checkout channels, as well as fine-tuning proprietary risk-management models.

Banks reported decent loan growth in the spring and early summer as businesses rushed to draw down credit lines and tap the Paycheck Protection Program. But demand has been muted since, and bankers can only guess when it will pick back up.

The new unit will be based in Charlotte, N.C., and led by Bo Weatherly; it will provide warehouse lines of credit to nonbank consumer and commercial lenders; it will also provide underwriting services.

Some in the industry worry the Fed may balk at allowing OCC charter recipients into the payments system, but Otting downplayed those concerns.

The nation's fifth-largest bank on Monday rolled out a three-month consumer loan that is far less expensive than the typical payday loan. The move comes as regulators are encouraging banks to reach out to the subprime market, which they largely abandoned.