OCC FinTech Charters Still Not Ready for Deployment

Speaking to a conference this week in New York, Acting Comptroller of the Currency Keith Noreika reiterated that his agency’s proposal to issue special purpose bank charters to fintech companies is still in an “exploratory phase.” His comments come at a time when major fintech companies are clamoring to join the ranks of national banks and are accelerating their metamorphosis by applying for traditional bank charters.

Not all within the banking industry welcome the Comptroller’s initiative to carve out a special place in banking regulation for the emerging fintech industry, the state of New York and the Conference of State Bank Supervisors (CSBS) have filed separate lawsuits challenging the Comptroller’s authority to issue special bank charters under the National Bank Act.

In addition to the lawsuits, the CSBS is rolling out an alternative to the FinTech charters, called Vision 2020. The initiative seeks to standardize state regulatory systems and develop a data sharing accord that helps states maintain up-to-date information to craft new rules. The vision includes components for a multistate licensing system and industry advisory panel. The hope is that the new measures will aid state regulators in keeping current with new technological breakthroughs and ease the ability of banks to provide services to non-banks.

In New York, Maria Vullo, head of the state Department of Financial Services (NYDFS), believes states are in a better position to fintech. In a letter to former Comptroller Thomas Curry, NYDFS promoted its decades of experience regulating financial institutions. As Vullo pointed out, “we’re regulating the institutions; we’re not regulating the technology.” FinTech companies appear to be sidestepping the debate between state regulators and Comptroller Noreika by pursuing traditional bank charters; how that decision influences the future of fintech remains to be seen.