The American Bankers Association (ABA) announced this week its backing of a proposal put forth by the Office of the Comptroller of the Currency (OCC) to charter financial technology companies as banks as long as they are adequately regulated.
Rob Morgan, ABA’s vice president, emerging technologies, said in a letter to the OCC that fintech firms can benefit consumers in different ways, including improved transparency, more available credit and financial inclusion.
“These benefits are only realized when innovations are delivered responsibly, as ensured by regulation and oversight,” Morgan said.
As long as consumers get the same level of protections, they don’t necessarily differentiate one provider from the next, he said.
“To customers, a loan is a loan and a payment is a payment,” Morgan said. “Federal law provides for numerous protections for consumers when they borrow, and they expect this same level of protection in all financial services interactions.”
The key is making sure that fintech firms are properly regulated and the right protections are put in place. Issues like capital requirements, liquidity and governance structure, recommendations for effective oversight and charter responsibilities must be considered.
“ABA views the OCC’s intent to issue charters as an opportunity to further bring exciting financial technology into the banking system, ensuring that innovative products are offered in a safe and responsible manner that customers can trust,” Morgan said.