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July 31, 2018

OCC announced that it will begin accepting applications for national bank charters from nondepository fintech companies engaged in the business of banking. This decision is consistent with bi-partisan government efforts at federal and state levels to promote economic opportunity and support innovation that can improve financial services to consumers, businesses, and communities. The decision was documented in a policy statement and supplement to the OCC’s Comptroller's Licensing Manual.

In announcing the decision, the policy statement and Comptroller's Licensing Manual Supplement stress:

  • 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. 
  • 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.
  • 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.

OCC has statutory authority, regulations, and policies that govern its review and decision making with respect to chartering national banks, including special purpose national banks. That authority includes companies that engage in one of the core banking functions (paying checks, lending money, or taking deposits) and is described at 12 CFR 5.20(e)(1). That authority does not require the bank to take deposits within the meaning of the Federal Deposit Insurance Act and, therefore, would not require insurance from FDIC. Qualifying fintech companies also may apply for federal charters under the authority of OCC to charter full-service national banks and other special purpose banks, such as trust banks, banker’s banks, and credit card banks.

 

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Keywords: Americas, US, Banking, Fintech, Regtech, National Bank Charter, OCC

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