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.
  • Purpose
  • 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.
  • SPNB
  • 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.
  • Effect
  • 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."

Regulators OCC
Entity Types Bank; Corp
Reference PR 3/15/17, fintech
Functions Compliance; C-Suite; Financial; Legal; Registration
Countries United States of America
Products Banking
Regions Am
Rule Type Guidance
Rule Date 3/15/2017
Effective Date 4/14/2017
Rule Id 31472
Linked to N/A
Report Issue 4/1/2017
Report Section US Banking

Last substantive update on 03/15/2017