OCC Opens National Bank Charter Applications to Financial Technology Companies

On July 31, the OCC announced that the agency will begin accepting national bank charter applications from fintech companies—nondepository financial technology companies engaged in any of the enumerated core banking functions.  This decision follows the solicitation and review of public comments in December 2016 and March 2017.

On the same day, the OCC published a policy statement and supplement to the OCC’s Comptroller’s Licensing Manual to document the decision to open the national bank charter to fintech companies.  The OCC, in announcing the decision, emphasized the following five points from these two publications:

• Every application will be evaluated on its unique facts and circumstances.
• Fintech companies that apply and qualify for, and receive, special purpose national bank charters will be supervised like similarly situated national banks, to include capital, liquidity, and financial inclusion commitments as appropriate. Fintech companies will be expected to submit an acceptable contingency plan to address significant financial stress that could threaten the viability of the bank. The plan would outline strategies for restoring the bank’s financial strength and options for selling, merging, or liquidating the bank in the event the recovery strategies are not effective.
• The expectations for promoting financial inclusion will depend on the company’s business model and the types of planned products, services, and activities.
• New fintech companies that become special purpose national banks will be subject to heightened supervision initially, similar to other de novo banks.
• The OCC has the authority, expertise, processes, procedures, and resources necessary to supervise fintech companies that become national banks and to unwind a fintech company that becomes a national bank in the event that it fails.

“The decision to consider applications for special purpose national bank charters from innovative companies helps provide more choices to consumers and businesses, and creates greater opportunity for companies that want to provide banking services in America,” said Comptroller of the Currency Joseph M. Otting.  He continued, “Providing a path for fintech companies to become national banks can make the federal banking system stronger by promoting economic growth and opportunity, modernization and innovation, and competition.  It also provides consumers greater choice, can promote financial inclusion, and creates a more level playing field for financial services competition.”

The OCC announcement and related publications are accessible here.