OCC Getting Closer to Decision on Proposed Charter for Fintech

For nearly a year and half, the Office of the Comptroller of the Currency has been exploring the possibility of extending a special purpose national bank charter to fintech companies like online lenders. During a press call on May 24, Comptroller of the Currency Joseph Otting suggested that the OCC would release guidance on whether they are moving forward with the plan, which was initiated by his predecessor in December 2016.

As reported on PYMNTS.com, the aim of the charter is to help fintech companies reach people who are underserved by traditional banking, as well as help them maintain consumer protections. The fintechs that receive a charter would be subjected to regular scrutiny to ensure they are meeting the standards set forth by the OCC.

A study released by the FDIC in 2016 found that approximately 9.0 million U.S. households (15.6 million adults and 7.6 million children) were unbanked in 2015, meaning that no one in the household had a checking or savings account. An additional 24.5 million U.S. households (51.1 million adults and 16.3 million children) were underbanked, in which they had an account but had also relied on alternative financial services within the past 12 months.

With more customers looking to financial solutions outside of the traditional banking system, the proposed charter, if it goes through, could be a gamechanger. If the policy is adopted, companies seeking a charter would still have to go through a four-stage chartering process, comprised of a prefiling stage, filing stage, review and evaluation stage, and a 3-phase decision stage.