Financial technology (FinTech) startups from Silicon Valley and across the United States are revolutionizing the financial services industry and introducing innovative technologies to the benefit of consumers. While some view these innovators as disrupters, FSR also views them as potential partners. Working collaboratively with technology innovators, we are seeking to address some of today’s – and tomorrow’s – most pressing challenges like enhancing financial inclusion, creating convenience and security for consumers, and pairing new services to meet the changing demands of customers.
Last week, the Office of the Comptroller of the Currency (OCC) released a white paper on FinTech innovation articulating principles that will guide the development of a framework to improve the agency’s ability to understand and evaluate innovation in the financial services industry.
The white paper is welcome news and comes at a time when consumers are turning to FinTech companies for service and convenience, and investments in these companies reach new highs. Many financial institutions are also investing in FinTech startups or leading the way to enhance their own technology operations. Regulators are now adapting to these trends and recognize there are important consumer protection, disclosure and security challenges that have to be addressed.
So what’s the OCC doing? It is rethinking its own operations to keep up with FinTech innovations. The white paper lays out principles that will guide the development of a new framework to support “responsible innovation”. It proposes creating a new office of innovation, streamlining licensing procedures, allowing banks to test new technologies on a small scale, and considers designating lead experts to provide advice on innovation. The OCC also mentions that it may issue guidance on its expectations for products and services for low and moderate income individuals, and that it will host “innovator fairs” to bring together banks and other stakeholders with OCC officials to discuss regulatory requirements. There is no call for a national charter for FinTech companies, nor does it get into the OCC’s specific views on the issue.
This is a good start to a much-needed discussion in Washington. FSR and its technology policy division BITS will continue to play a leading role in FinTech advocacy. We look forward to working with policymakers and regulators to lead the American economy into the future while better serving and protecting consumers.