The issue of whether or not to grant a national bank charter to FinTechs that conduct banking activities is being considered by the Office of the Comptroller of the Currency (OCC) as Comptroller Thomas Curry delivered a public address this week in London on “The Banking Revolution: Innovation, Regulation, and Consumer Choice.”
Curry has given several public speeches this year in which he acknowledged the exploding popularity of FinTechs, the competition those firms are giving banks, and the importance of responsible innovation. In October, the OCC announced the creation of an Office of Innovation which will be dedicated to responsible innovation in the financial industry. The Office of Innovation will begin operations sometime during the first quarter of 2017.
Many FinTechs perform banking activities such as taking deposits, paying checks, or lending money—and while these companies help to expand financial inclusion, that inclusion must be balanced with consumer protections and prudential regulatory concerns, Curry said.
“We are still deliberating about whether it makes sense to grant a national bank charter to FinTechs, and under what conditions,” Curry said. “We plan to issue a paper soon to describe our thoughts on this important question and seek comment on our approach.”
Opinions about as to how the OCC should handle the situation of whether or not to issue FinTechs a bank charter. On one hand, it has been suggested that national charters could ensure that FinTechs receive the same rigorous, regulatory oversight and ongoing supervision from federal regulators that banks do; others say national charters could help FinTechs navigate the regulatory landscape by consolidating oversight, reducing licensing burden, and applying a uniform set of rules, Curry said. Still others are afraid that a limited bank charter might allow FinTechs to face lighter supervision and escape consumer protections that apply only to depository institutions.
“So let me be clear, if the OCC decides to grant a national charter in this area, the institution will be held to the same high standards of safety, soundness, and fairness that other federally chartered institutions must meet,” Curry said. “Having a national charter has tremendous value, and because of that it carries certain responsibilities.”
If there is a place for financial companies that focus on certain aspects of banking 10 or 15 years from now, then a regulatory framework and supervision structure needs to be in place to ensure that the companies operate in a safe and sound manner and are fully compliant with all laws and regulations, Curry said.
Click here to read Curry’s complete speech.