In a letter to the Office of the Comptroller of the Currency (OCC), the Financial Services Roundtable (FSR) expressed support for a proposal to charter financial technology (fintech) companies as banks.
“We commend the OCC for its development of this proposal. Just as the financial industry needs to evolve with technology and changing customer preferences, so, too, must financial regulations and the regulators themselves,” the letter said. “A special purpose national bank charter for Fintech companies would be an important step in that process.”
FSR did say, however, that the initiative should not result in a two-tiered system where fintech banks operate under compromised supervisory standards and consumer protection requirements.
“[T]he stated goal of this proposal is to encourage the entry into federally regulated financial services of FinTech companies that can help meet the financial needs of consumers, families, and businesses. We strongly support this goal,” the letter said. “Yet, depending on how the OCC addresses and defines this notion of parity, it is possible the small pool of FinTech firms with the scale and resources to even consider applying for an OCC charter may find such regulatory and supervisory standards difficult to achieve, or more likely, not worth the cost. In that case, the purpose of this initiative would be frustrated, and this critical goal not met.”
FSR believes that a special purpose charter for fintech companies should be based on the principle of responsible innovation. It is a leading advocate for fintech companies, recently hosting the inaugural FinTech Ideas Festival.
“To avoid that result, yet ensure parity in regulation and supervision, the OCC may find it necessary to re-evaluate some standards applicable to full-service national banks and, as mentioned previously, examine the existing regulatory constraints inhibiting national banks from engaging in responsible innovation,” the letter said.