OCC Announces Plans to Establish Office of Financial Technology

Last week, the Office of the Comptroller of the Currency (OCC) announced plans to create an Office of Financial Technology in 2023 to help the agency adapt to the changing banking landscape. The office will incorporate and build on the Office of Innovation, which was established in 2016 to help the agency support responsible financial innovation.

“Financial technology is changing rapidly and bank-fintech partnerships are likely to continue growing in number and complexity,” said Michael Hsu, Acting Comptroller of the Currency. “To ensure that the federal banking system is safe, sound, and fair today and well into the future, we need to have a deep understanding of financial technology and the financial technology landscape.”

In September, Hsu announced an OCC initiative to subdivide bank-fintech deals into cohorts with similar soundness and safety protocols. According to Banking Dive, Hsu said those arrangements are altering the industry’s risk profile and represent the “de-integration” of banking.

Conservative lawmakers have feared that overregulation could curb innovation, and have hoped that the OCC would offer clearer guidance on how it plans to oversee relationships between banks and fintechs.

“Fintech partnerships can lead to cost savings for both fintechs and banks, increase competition, and provide faster, better, and cheaper banking products and services for consumers,” wrote five House Republicans, led by Rep. Patrick McHenry (R-N.C.) in a letter to Hsu.

The OCC’s Office of Financial Technology will be led by a Deputy Comptroller to provide strategic leadership and vision for the regulator’s activities with financial technology. The Deputy Comptroller will report to the Senior Deputy Comptroller for Bank Supervision Policy.