OCC Considers in Granting Special Purpose National Bank Charters for Fintech Companies

The Office of the Comptroller of the Currency (OCC) will consider applications from fintech companies to become special purpose national banks, according to Comptroller Thomas Curry.

The topic of fintech has been drawing increased interest in the sphere of banking and finance recently. As for statistics, Curry underlined that the number of fintech companies in the United States and United Kingdom has reached 4,000 while the investment in the sector has expanded from $1.8 billion to $24 billion in the last five years.

The launch of Office of Innovation in October became the first step to organize a non-supervisory forum for banks and fintechs to interact with the OCC.

“Our next step, which I am announcing here today, is that the OCC will move forward with chartering financial technology companies that offer bank products and services and meet our high standards and chartering requirements,” Curry said. “First and foremost, we believe doing so is in the public interest. 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.”

The OCC published a paper on the conditions that the agency will consider in granting special purpose national bank charters. As a rule, companies are evaluated to demonstrate strong capital and liquidity, effective consumer protection, appropriate risk management, and a reasonable chance of success to get a charter.

The US Treasury Department is seeking public inputs about its consideration of Fintech firms as ‘special purpose’ national banks.

“The reality today is that the 4,000 fintech companies out there are already competing with national and state banks, without regard to any of the national bank responsibilities and under a patchwork of supervision,” Curry said. “Granting national charters to the companies who desire and warrant one doesn’t weaken the competitive position of existing banks or the dual banking system. In some ways, it levels the playing field because statutes that by their terms apply to national banks would apply to all special purpose national banks, even uninsured ones.”

Not long ago only traditional banks were entitled to offer these services. And if nonbank providers of financial services used to be taken as competitors of banks, now fintech companies are considering whether to become banks.

There is now a need to provide fintech companies with rational regulation, which will allow them operating in a safe manner in accordance with the needs of customers just as banks with full-service charters do.

The OCC welcomes a feedback on all aspects of the paper till January 15, 2017.