OCC Calls for Comment on Supervisory Goals for Financial Innovation in Fintech

Last Thursday, the Office of the Comptroller of the Currency (the “OCC”) issued a white paper “detailing how it plans to supervise financial innovation at national banks and beyond,” according to an American Banker article. In remarks made by Comptroller Thomas Curry at Harvard last week, he stated that the OCC is “working on a framework to help us understand and evaluate innovation” and went on to say that “we want to foster an internal culture that is receptive to new technology and new ways of doing business.”

The white paper describes the eight guiding principles the OCC will follow in “handling regulation of financial technology, ranging from a commitment to better communicate with financial institutions to a pledge to work with the Consumer Financial Protection Bureau and other regulators to develop a consistent supervisory approach to fintech products.” The OCC has established internal working groups to monitor developments in marketplace lending and payments systems policy, and the article discusses that the “agency might also issue new guidance on product development, third-party risk management and new products targeting the underbanked; streamline its licensing procedures; and appoint experts on ‘responsible innovation’.”

Following are the eight principles presented in the white paper: 1) support responsible innovation; 2) foster an internal culture receptive to responsible innovation; 3) leverage agency experience and expertise; 4) encourage responsible innovation that provides fair access to financial services and fair treatment of consumers; 5) further safe and sound operations through effective risk management; 6) encourage banks of all sizes to integrate responsible innovation into their strategic planning; 7) promote ongoing dialogue through formal outreach; and 8) collaborate with other regulators.

In summary, the OCC “advised banks to remain consistent even as they venture into new lines of business” and stressed that “investment in new products must be done ‘in a manner that is consistent with sound risk management and is aligned with the bank's overall business strategy’."

Written comments on the questions and other topics presented in the OCC’s white paper are due on May 31, 2016.

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