The Office of the Comptroller of the Currency will move forward with considering applications from financial technology companies to become special purpose national banks, Comptroller of the Currency Thomas J. Curry announced Dec. 2.
Curry outlined several reasons for considering special purpose national charters for fintech companies during remarks at Georgetown University Law Center in Washington D.C.
“It is clear that fintech companies hold great potential to expand financial inclusion, empower consumers, and help families and businesses take more control of their financial matters,” Curry said in the remarks.
Curry added that companies that offer banking products and services should have the choice to become to become national banks. “Merely making a charter available does not create a requirement to seek one,” he said. “Nor does it displace the other choices a fintech company may have — for example, seeking a state bank charter in a state that makes one available or to continue operating outside the banking system.”
Companies that seek a charter will carefully be evaluated to ensure they have a reasonable chance of success, appropriate risk management, effective consumer protection, and strong capital and liquidity, according to Curry.
“The OCC has the authority to grant special purpose national bank charters to fintech firms that conduct at least one of three core banking activities — receiving deposits, paying checks or lending money,” he said in the remarks. “But, that authority is not to be taken lightly, which is why I have asked staff to develop and implement a formal agency policy for evaluating applications for fintech charters … Such policy helps ensure that we evaluate future fintech applications in a thoughtful and transparent manner and that we have necessary guard rails in place to ensure approvals consider safety and soundness, financial inclusion, consumer protection, community reinvestment and corporate responsibility.”
The OCC published a white paper outlining the issues and conditions the agency will consider in granting special purpose national bank charters. The paper is available on the agency’s website at occ.gov. Comments may be submitted through Jan. 15.
Initial reactions to the OCC’s plan were mixed.
The American Bankers Association said it welcomed the news in a Dec. 2 statement on its website.
“We are strongly encouraged by the OCC’s comments of a potential special purpose charter for fintech companies,” ABA President and CEO Rob Nichols said in the statement. “This is a bank charter for fintech companies that will hold them to the same standards for safety, access and fair treatment. Maintaining high standards is the best way to ensure customers have access to the best financial products and services.”
However, the Conference of State Bank Supervisors released a statement on its website saying the OCC’s plan to establish a special purpose federal charter for fintech firms is “fatally flawed,” and would undermine state financial protection laws designed to protect consumers. John W. Ryan, president and chief executive officer at CSBS, said the OCC’s announcement represents “an historic expansion of the role of the federal government, one that will permeate into the economies in all 50 states and distort the financial system with unwelcome consequences.”
More information about the OCC’s plan is available on the agency’s website by clicking here.