The federal government has given General Motors Co. and Ford Motor Co. conditional approval to create industrial banks that will allow the companies to accept insured deposits for vehicle purchases.

The automakers have a year to set up GM Financial Bank and Ford Credit Bank, respectively, which both are chartered out of Salt Lake City, Utah. Industrial banks are regulated and governed like any other banking institution, but are more limited in scope. They allow the companies to accept deposits insured by the Federal Deposit Insurance Corp. into savings accounts, which the automakers couldn't do before. Those deposits then can generate earnings and greater savings opportunities for consumers.

"Ford is good at what they do. We're hoping that our bank will be the same," Ford Credit Bank President Frank Stepan said. "We're hoping that we can help customers that know Ford, that have known our vehicles for many years. We want to continue those relationships. We want to strengthen the relationships with our customers, and we feel this is a way that we can do that through our bank."

The banks have been in the works for years, but their approvals come as affordability is a major concern in the automotive industry. U.S. average transaction prices hover around $50,000, and nearly half of auto loan borrowers have entered into terms longer than six years, according to LendingTree.

"Affordability is a big issue, and it's one we talk about a lot internally, and we actually have a lot of plans to address that," Ford Executive Chairman Bill Ford said last week during the Detroit Auto Show.

The Detroit News left inquiries with representatives for GM and GM Financial.

Deposits at Ford Credit Bank will be able to fund a new vehicle purchase, accessories, electric vehicle chargers, software upgrades and the like. The organization also in the future hopes to offer certificates of deposits and indirect financing of Ford and Lincoln vehicles through their dealers. The goal with that would be to create a seamless experience so consumers won't notice a different between financing through Ford Credit Bank or the traditional Ford Credit financing arm of the company, Stepan said.

Setting up the organization will happen over the next year, and then it will launch a simple savings program — another tool to support customers, Stepan said.

"It will expand our capabilities to offer savings options to the customers," he said. "It will lower our cost of funding over time, and it allow us to broaden our financing options."

Pro-business policies around regulations and tax benefits have contributed to Utah being a hub for industrial bank headquarters and growing a knowledgeable workforce in fintech.

The automakers' industrial banks will be required to maintain a minimum 15% tier 1 leverage ratio, representing a high regulatory-mandated capital requirement. The automakers also must support the banks' capital and liquidity positions.

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