OCC Begins Accepting FinTech National Bank Charter Applications
At long last, the Office of the Comptroller of the Currency has announced that they’re accepting national bank charter applications from FinTechs. The move comes after the U.S. Department of the Treasury released a report titled “A Financial System That Creates Economic Opportunities: Nonbank Financials, FinTech, and Innovation” that offered recommendations intended to “modernize regulations for an array of financial products and activities.” As expected these charters will be dubbed Special Purpose National Banks, with the OCC explaining that “FinTech companies that apply and qualify for, and receive, special purpose national bank charters will be supervised like similarly situated national banks, to include capital, liquidity, and financial inclusion commitments as appropriate.”
Announcing the acceptance of FinTech charter applications, Comptroller of the Currency Joseph Otting said in a statement, “The decision to consider applications for special purpose national bank charters from innovative companies helps provide more choices to consumers and businesses, and creates greater opportunity for companies that want to provide banking services in America. Companies that provide banking services in innovative ways deserve the opportunity to pursue that business on a national scale as a federally chartered, regulated bank.” Similarly, in the Treasury Department’s report, Secretary Steven Mnuchin wrote, “American innovation is a cornerstone of a healthy U.S. economy. Creating a regulatory environment that supports responsible innovation is crucial for economic growth and success, particularly in the financial sector. America is a leader in innovation. We must keep pace with industry changes and encourage financial ingenuity to foster the nation’s vibrant financial services and technology sectors.”
As Forbes reports, reaction to the OCC’s announcement has been mixed. While most seem to agree that the development is a positive one, there are still concerns that the decision doesn’t do enough to fix the FinTech regulatory system. Additionally some legislators have taken issue with this federal mandate overriding previous state regulatory policies. Among them is New York DFS superintendent Maria Vullo, who said in a statement that the new charter “is clearly not authorized under the National Bank Act…[and] will impose an entirely unjustified federal regulatory scheme on an already fully functional and deeply rooted state regulatory landscape.”
It’s been more than a year and a half since the OCC first unveiled plans to offer FinTechs Special Purpose National Bank charters, with the delay leading some to wonder if the idea would actually come to fruition. Now that the big day has finally arrived it’s still not clear what impact the new regulatory rules will have on the sector. Additionally, with the announcement just over a week old, we have yet to know which FinTechs might apply for the new charter and which will continue under their current schemes. In any case, there’s clearly a growing focus on FinTech for better or worse.