For months, the Office of the Comptroller of the Currency (OCC) has been considering whether to grant a special purpose national bank charter to non-bank financial technology companies that offer banking products and services.
Now, after more than a year of extensive research to build a framework for responsible innovation in the financial industry and the establishment of an Office of Innovation as a non-supervisory forum for banks and FinTechs to interact with the OCC, Comptroller of the Currency Thomas Curry in a speech on Friday announced that the OCC will move forward in granting special purpose national bank charters to FinTechs that meet the requirements.
Speaking at Georgetown University Law Center, Curry discussed the concurrent release of a paper from the OCC that outlined the issues associated with approving a national bank charter, and he stated that the OCC is seeking comment from stakeholders on the matter.
“We have decided to move forward and to make available special purpose national charters to FinTech companies for a few basic reasons. First and foremost, we believe doing so is in the public interest,” Curry said. “FinTech companies hold great potential to expand financial inclusion, empower consumers, and help families and businesses take more control of their financial matters. FinTechs, while not without some risks, also can potentially deliver these products and services in a safer and more efficient manner. Preferences and needs of consumers, communities, and business are changing. And chartering companies that are finding new and better ways of satisfying those needs is another step toward supporting responsible innovation that is good for consumers, good for the federal banking system, and good for the country.”
Curry noted that the charter will be available and that FinTechs are not required to take advantage of it—he stressed that they should have the choice to become national banks if they want to. The institutions that receive charters should have a reasonable chance to succeed made possible by a clear process for FinTechs to become national banks if that is their choice.
“Many FinTechs will choose to partner with existing banks or provide services to banks and other financial companies, but some will seek to become a bank,” Curry said. “In those cases, it will be much better for the health of the federal banking system and everyone who relies on these institutions, if these companies enter the system through a clearly marked front gate, rather than in some back door, where risks may not be as thoughtfully assessed and managed.”
The need for a more responsible framework for innovation was brought on by the exploding popularity of FinTechs in the last few years—Curry noted in his speech that the number of these companies has grown to 4,000 in the U.S. and U.K. combined in the last five years, while worldwide investment in FinTechs has skyrocketed from $1.8 billion up to $24 billion during the same time period.
But the financial needs of consumers are also changing, Curry said, and today’s consumers are looking for “better, faster, more accessible products and services, and they are willing to switch providers or use multiple providers to get what they want. These consumers expect to be able to transact basic banking and financial business anywhere, anytime, from the palm of their hands.”
Click here to view Curry’s complete speech.
Click here to view the OCC’s paper, Exploring Special Purpose National Bank Charters for FinTech Companies.