OCC Fintech Licensing Manual
On Mar. 15, OCC issued draft licensing manual for fintech companies.
- Supplemented existing licensing manual to evaluate national bank charter applications
from financial technology (fintech) companies that engage in the business of banking.
- Explains how OCC will apply licensing standards and regulations to fintech companies.
- Also describes unique factors that the agency will consider in evaluating applications.
- Agency’s approach to supervising those fintech companies that become national banks.
- Builds on two-year research on topic of responsible innovation, see #27000 and #30097.
- Also comments received from industry and public much discussed area by stakeholders.
- Public interest to take applications by fintech for special purpose national bank (SPNB).
- Apply a wide framework of uniform standards, supervision for companies that qualify.
- Support dual banking system giving fintech companies option to offer banking products.
- To encourage fintech companies to use innovative ways to promote financial inclusion.
- Means national bank engaged in limited range of banking activities, but not take deposits.
- Entity not insured by FDIC, supplement only applies to these companies not other types.
- National bank charters varied: full-service and other special purpose national bank charters.
- But becomes a national bank subject to laws, regulations, federal supervision apply to all.
- Licensing Procedures
- Initial inquiry concerning a charter application through the OCC’s Office of Innovation.
- Will schedule exploratory meeting with the OCC staff, including the OCC Licensing Division.
- Followed by prefiling stage may include one or more formal prefiling meetings on licensing.
- Plan for lending to consumers, small businesses to show commitment to financial inclusion.
- SPNB Activities
- Limited to those that permissible for national banks under statute, regulation or precedent.
- One of the three core banking activities: taking deposits, paying checks, or lending money.
- May include not previously been determined to be part of, incidental to, banking business.
- Chartering Standards
- Once firm submits a proposal, OCC determines whether it satisfies the chartering standards.
- Same as for all other charters with no inappropriate commingling of banking and commerce.
- OCC may identify specific controls necessary for the success of the applicant business plan.
- Guidance on qualifications of organizers, management, directors, respective roles of each.
- Also provides detailed instructions of what business plan must cover, financial inclusion too.
- Chartering Decision
- First, OCC determines if to grant preliminary conditional approval or deny the application.
- Indicates OCC’s permission to proceed with organization of the bank according to the plan.
- Final approval would mean charter is issued and bank can begin conduct banking business.
- No extensive guidance issued regarding the OCC's supervisory expectation and supervision.
- Not typically subject to comment, but will accept comments until April 14, 2017 on this.
- NY DFS
- Opposed OCC proposal, "will invite efforts to evade state usury laws and other protections."
||PR 3/15/17, fintech
||Compliance; C-Suite; Financial; Legal; Registration
||United States of America
Last substantive update on 03/15/2017