PayPal Holdings Inc. (PYPL) shares climbed in after-hours trading Monday after the payments giant announced it's taking a serious swing at becoming an actual bank.

The Banking Play: PayPal revealed it submitted applications to both the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) to establish PayPal Bank. This isn't just a vanity project—the company sees banking infrastructure as a way to supercharge its small business lending operations.

"Securing capital remains a significant hurdle for small businesses striving to grow and scale," said Alex Chriss, president and CEO of PayPal.

The proposed bank would offer interest-bearing savings accounts to customers alongside expanded small business lending services. Perhaps more strategically, PayPal Bank would seek direct membership with U.S. card networks, giving the company more control over processing and settlement—cutting out some middlemen in the process.

If regulators give the green light, customer deposits at PayPal Bank would qualify for FDIC insurance coverage, giving customers the same protections they'd expect from traditional banks. Mara McNeill has already been tapped to serve as president of the new bank.

PYPL Price Action: PayPal shares were up 1.33% at $61.55 at the time of publication on Monday.