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FinTech Charters May Have Difficult Road Ahead

New leadership at the Office of the Comptroller of the Currency and various state regulators are just a few of the hurdles that could stall the OCC’s initiative to grant FinTech companies national bank charters, according to the ForeSight report released by Mercator Advisory Group on Friday.

The OCC announced its intent to allow FinTechs to apply for special purpose national bank charters, and in March, after reviewing public commentary, the office published a draft of its guide for evaluating such applications. According to the ForeSight report, the landscape has changed since the OCC’s first move on this initiative, and it could stall—or even halt altogether—its progress.

For one, according to Steve Murphy, Director of Mercator’s Commercial and Enterprise Payments Advisory Service, FinTechs may not even have interest in the oversight and regulations that traditional banks see. Changes in leadership at the OCC could pose an obstacle as well.

President Trump named attorney Keith A. Noreika to replace Thomas J. Curry as head of the Office of the Comptroller of the Currency in early May. Curry had served in the post for five years and introduced the initiative back in December.

"The OCC made a bold move in seeming recognition that financial services is rapidly changing assuming that FinTechs may wish to be regulated like any other national bank,” Murphy said. “The initiative was championed by then-Comptroller Thomas J. Curry, however, who left office in early May, and his permanent replacement may have a different view.”

Various state regulators could also impact the initiative as well, as many have entered litigation with the OCC, claiming it’s an overstep of federal power.

“State regulators have been primary objectors to the OCC’s move, and in April filed a lawsuit that challenges the federal regulator’s authority to implement this particular form of national bank charter,” Murphy said.

Mercator’s ForeSight report also delves into the overall implications of the FinTech charter initiative, both on the U.S. regulatory structure and the bank chartering process. To download the full ForeSight report, visit MercatorAdvisoryGroup.com.

About Author: Aly J. Yale

Aly J. Yale is a longtime writer and editor from Texas. Her resume boasts positions with The Dallas Morning News, NBC, PBS, and various other regional and national publications. She has also worked with both the Five Star Institute and REO Red Book, as well as various other mortgage industry clients on content strategy, blogging, marketing, and more.
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