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"More than 150 years later, we have Curry added that the OCC would closely supervise the newly chartered firms
a diversified and evolving financial to ensure they have implemented a sound, financially inclusive business
services industry," he wrote. "New plan; a governance structure to manage banking activities; risk management
technology makes financial products procedures; compliance procedures; capital, liquidity requirements, tailored to
and services more accessible, easier to each firm, to mitigate potential insolvency; and disaster recovery procedures.
use, and much more tailored to indi-
vidual consumer needs." Fair, innovation-friendly environment

Curry also shared how much con- The OCC realizes the importance of a regulatory framework that supports
sumer behavior and demographics and encourages innovation. And the OCC's paper encourages interaction
have changed in recent years. For and ongoing collaboration between fintechs and regulators as they navigate
example, 85 million millennials use unforeseen challenges to regulatory expectations.
technology-driven nonbank compa-
nies that offer products and services Curry challenged the OCC staff to work within proposed innovation-friendly
formerly limited to traditional banks, guidelines on a set of prerequisites for nonbank companies applying for national
he stated. Some of these fintech com- bank status. Their diversity is summarized in the OCC paper, which Curry said,
panies are exploring whether to be- "makes clear that if we decide to grant a national charter to a particular fintech
come banks. company, that institution will be held to the same high standards of safety
and soundness, fair access and fair treatment of customers that all federally
Mixed response chartered institutions must meet."

"Should a nonbank company that of- Open for comment, debate
fers banking-related products have a
path to become a bank?" Curry wrote. Curry invited payments industry stakeholders to participate with the OCC in
For Maria T. Vullo, Superintendent of drafting the charter. He seeks clarification on the Community Reinvestment Act
the New York State Department of (CRA), which applies to institutions insured by the Federal Deposit Insurance
Financial Services, the answer is no. Corp. Fintech firms that do not take deposits are not expected to be subject to
Vullo issued a statement opposing
the charter and warning of its poten-
tial harm to consumers. "New York
will not allow consumer protections
to fall into the void," she said.

Fintech firms that support the initia-
tive are confident federal and state
regulatory agencies would collabo-
rate with transitioning fintech firms
to ensure compliance with fair lend-
ing practices. And fintechs aspir-
ing to become financial institutions
would be subject to intensive review
and a steep set of requirements, pay-
ments analysts noted.

Steep requirements

Fintech firms applying for bank char-
ters would need to meet exacting
standards, according to the OCC. In
addition to having an appropriate
corporate structure, the applicants
would be required to prove they en-
gage solely in bank-permissible ac-
tivities, such as payment or lending
activities, and adhere to regulatory
requirements set forth by the Con-
sumer Financial Protection Bureau,
Bank Secrecy Act and anti-money
laundering statutes.

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