US regulator opens up national bank charters to fintech
The US Office of the Comptroller of the Currency (OCC) is now accepting applications for national bank charters from non-depository fintech firms.
“Over the past 150 years banks and the federal banking system have been the source of tremendous innovation that has improved banking services and made them more accessible to millions. The federal banking system must continue to evolve and embrace innovation to meet the changing customer needs and serve as a source of strength for the nation’s economy,” says Comptroller of the Currency Joseph M. Otting.
As with regulators around the world, the OCC rolls out the usual line that the decision to consider applications is to provide more choices to consumers and businesses.
The OCC’s decision also follows “extensive outreach with many stakeholders” over a two-year period, and after reviewing public comments following the publication of Exploring Special Purpose National Bank Charters for Fintech Companies in December 2016, and Comptroller’s Licensing Manual Draft Supplement: Evaluating Charter Applications From Financial Technology Companies in March 2017.
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.
The OCC states that firms will be expected to submit an acceptable contingency plan to address significant financial stress that could threaten the viability of the bank.
New fintech companies that become special purpose national banks will be subject to “heightened supervision initially, similar to other de novo banks”.
Not everyone waited. Last year, mobile banking start-up Varo Money was looking to become a true challenger bank, complete with a national bank charter.