In a January 13, 2017 comment letter, CBAI urged the Office of Comptroller of the Currency (OCC) to delay moving forward with chartering new fintech companies until a number of concerns have been addressed and resolved. Read Comment Letter.
Before chartering fintechs, the OCC needs to demonstrate that it has the requisite expertise and is fully prepared to assume the many new responsibilitiesthat comes with a new charter. There are many related questions that must be answered, not the least of which is who will bear the cost of getting the OCC fully prepared to assume these new responsibilities? Community banks certainly do not want to, nor should they be required to, bear any of those costs.
The legal authority permitting the OCC to charter fintechs has been challenged by the Conference of State Bank Supervisors, on behalf of state banking regulators, and Senator Sherrod Brown (D-OH), the Ranking Member of Senate Banking Committee. The legal authority charter fintechs must be indisputably established before the OCC moves forward with considering applications for fintechs.
Despite being disruptive, Fintechs have the potential to be transformative for the entire financial service profession. A single regulator acting unilaterally in chartering, examining, supervising and regulating fintechs does not appear to be in the best interests of the profession, consumers and the economy. The cooperation and coordination between all of the national and state banking regulators is needed on areas of responsibility so that the collective expertise and unique perspectives of all agencies can be brought to bear on these important issues.
Unfortunately, by the very nature of their limited-purpose business models, fintechs already enjoy a competitive advantage over community banks. This competitive advantage, however, must not be exacerbated through lack of regulation and fintechs; must comply with all banking laws, rules and regulations, regardless of the limited scope of their activities. Fintechs cannot have the advantages of a national bank charter with limited requirements, regulations and liability. Read Comment Letter.