The Office of the Comptroller of the Currency could potentially charter financial technology (or fintech) companies as limited purpose trust companies, Comptroller of the Currency Thomas J. Curry said yesterday during a talk at Harvard University’s Kennedy School.
Curry was in town to promote the OCC’s newest initiative, aimed at encouraging what he called “responsible innovation” in the fintech sector. After delivering some prepared remarks introducing the OCC’s new effort, Curry took questions from his audience, addressing issues like the potential chartering of fintech companies, the patchwork of regulations across 50 states and the advantages and disadvantages of bank partnerships with fintech firms.
“I think there’s really an opportunity for multiple points of entry into the banking system for fintech firms and that’s really what we’re trying to address here,” Curry said.
The agency has watched fintech companies multiply in number and scope, both in the U.S. and abroad, and anticipates that demographic changes, particularly the Millennial generation’s preference for digital banking channels, will spur further innovation in the financial services sector.
“We’ve identified across the spectrum of institutions, from small banks to the largest national banks that are globally active, strategic risk which is really what fintech is. It’s a strategic risk,” Curry said. “How do banks today plan for what will be a change in the way they operate, for what their customer expectations are? And we think it’s important to do that now, establish the framework and analyze those questions that at the end of the day are going to dictate the success and failure of banks, fintech firms and the OCC.”
The OCC also released a white paper yesterday, outlining its research on the matter and its eight guiding principles for identifying and evaluating new technologies in the financial services sector. Those principles include fostering an internal culture that is receptive to innovation, furthering safety and soundness through risk management and collaboration with other regulatory agencies.
It would be inappropriate for the agency to bless a particular financial technology or partnership in advance, but the paper lays down guidelines for the agency as banks increasingly partner with fintech companies or launch their own in-house tech incubators.
Curry also said that examiners are in a unique position to share information, particularly with smaller financial institutions, and he said that banks may actually have an advantage over fintech companies when it comes to regulation.
Whether they like it or not, he said, banks have already built up a wealth of expertise in regulatory compliance.
