Since announcing it would begin considering charter applications from fintech companies, the Office of the Comptroller of the Currency (OCC) has yet to receive a single formal application, the top staffer in charge of innovation at the agency said in written testimony for a hearing Tuesday on Capitol Hill.
Beth Knickerbocker, the chief innovation officer at OCC, is among the five witnesses testifying at a hearing of the House Financial Services Committee Task Force on Financial Technology, titled “Overseeing the Fintech Revolution: Domestic and International Perspectives on Fintech Regulation.”
The OCC last July said it would consider charter applications from companies seeking to become special purpose national banks that would engage in one or more of the core banking activities of paying checks or lending money, but that would not take deposits or be insured by the Federal Deposit Insurance Corp. (FDIC). As Knickerbocker explains in her testimony, a fintech company that receives this type of special purpose national bank charter would be supervised like a similarly situated national bank, including with respect to capital and liquidity requirements; would initially be subject to heightened supervision, similar to other de novo banks; and would be expected to fulfill a financial inclusion commitment similar to the Community Reinvestment Act’s expectations for national banks that take insured deposits.
“A national bank charter is only one option among many for fintech companies,” she said in her testimony. “Other options may include state banking charters, appropriate business licenses, and partnerships with other federal and state financial institutions.”
Knickerbocker, answering questions from task force Chairman Stephen Lynch (D-Mass.) about reports of large tech firms like Google and Facebook (which has just announced its new cryptocurrency Libra) reaching out to the OCC, said she was unaware of any such overtures. On the potential impact of the “marriage” (as Lynch put it) of traditional banking and the technology community, Knickerbocker said there are several activities found in the tech environment that previously were the domain of banks and that the OCC is monitoring these. “If a national bank was involved with Libra, we would ensure its … compliance with the law,” she said.
The hearing also included testimony from Paul Watkins, assistant director of the Consumer Financial Protection Bureau’s Office of Innovation; Valerie Szczepanik, associate director of the Securities and Exchange Commission’s division of corporation finance and senior advisor for digital assets and innovation; Charles Clark, director of Washington State’s financial institutions department, for the Conference of State Bank Supervisors; and Christopher Woolard, board member and director of strategy and competition for the Financial Conduct Authority, United Kingdom.
Testimony of Beth Knickerbocker, OCC Chief Innovation Officer