On July 31, 2018 the Office of the Comptroller of the Currency (OCC) released its Supplement to the Comptroller’s Licensing Manual, which describes the key factors the OCC will consider in evaluating charter applications from fintech companies seeking to become special purpose national banks (SPNBs). Eligible fintech companies:

  • Have non-traditional or limited business models;
  • Do not take deposits;
  • Are not insured by the Federal Deposit Insurance Corporation (FDIC); and
  • Rely on funding sources different from those relied on by insured banks.

This article is a brief summary of the key takeaways from the supplement.


As a national bank, a Special Purpose National Bank (SPNB) will be subject to the laws, rules, regulations and federal supervision that apply to all national banks. In addition, companies seeking a charter as an SPNB will be expected to make a commitment to financial inclusion and develop and adhere to a contingency plan that includes options to sell, wind down, or merge with a non-bank affiliate, if necessary. To that end, becoming an SPNB is a very substantial undertaking and the concessions made by the OCC with respect to fintech companies are limited.

Application process

The OCC application process consists of four phases:

  • Pre-filing communications
  • Filing a charter application
  • OCC review of the application
  • The chartering decision

Pre-filing communications

The OCC strongly encourages potential applicants to engage with the OCC well in advance of filing a charter application, and such potential applicants should contact the Office of Innovation, the central point of contact and clearing house for requests and information related to innovation. Each potential applicant should be prepared to discuss the following:

  • Its proposed activities;
  • The market analysis supporting its business plan;
  • Its capital and liquidity needs;
  • Its contingency plan for periods of financing stress; and
  • How it will demonstrate a commitment to financial inclusion.

Filing a charter application

The OCC Licensing Department will determine whether an entity should submit a draft application before filing a formal application. The filing procedures for an SPNB will be substantially the same as those of any other national bank, including being made available for public comment.

OCC review of the application

The OCC seeks to make a decision on a complete and accurate application within 120 days after receipt. The OCC will consider the applicant’s business model, governance structure and risk profile.

Organizers, management and directors

The OCC will consider whether the organizers, managers, and directors have financial and business expertise in highly regulated industries. Since fintech companies are technology-driven, having sufficient technical knowledge, skills and experience will be as necessary as having sufficient banking and financial experience.

Business plan

All applicants must submit a comprehensive business plan, including earning prospects, management, capital, community service, safety and soundness and significant detail about the proposed bank’s activities. The business plan should clearly define the market that the proposed bank plans to serve, the products and services it will offer and a description of the proposed bank’s risk management framework to identify, monitor and control risks. A risk assessment, including the risk relating to third-party service providers, cybersecurity, Bank Secrecy Act and anti-money laundering requirements, Office of Foreign Assets Control economic sanctions obligations, consumer protection and fair lending should be provided as part of the business plan.

Capital and liquidity

An SPNB will be subject to the minimum leverage and risk-based capital requirements in 12 CFR 3 that apply to all national banks, and applicants will need to propose a minimum level of capital that the bank will meet or exceed at all times. Factors that applicants should consider include: on-and off-balance sheet composition; operational risk; proposed activities and impact on capital; plans and prospects for growth; and stability or volatility of sources of funds and access to capital.

The applicant should also address liquidity and funds management, especially since SPNBs are uninsured. Applicants should describe how the SPNB can be funded and maintain sufficient liquidity under stressed conditions. The OCC may impose tailored requirements on the SPNB to ensure it maintains adequate liquidity at all times.

Financial inclusion

An SPNB must demonstrate a commitment to financial inclusion, and such description should include the proposed goals, approaches, activities, milestones, commitment measures and metrics for serving the anticipated market and community.

Contingency planning

An SPNB must develop a contingency plan, which outlines strategies for restoring the bank’s financial strength and options for selling, merging or liquidating the bank in the event the recovery strategies are not effective. Final approval will require the bank to implement and adhere to such plan.

Other important considerations

Regulators in addition to the OCC may have oversight and supervisory roles over the bank. The OCC will coordinate with other regulators to facilitate consideration of any applications.

The chartering decision

The OCC grants approval of a charter application in two steps, preliminary conditional approval and final approval. The OCC will issue a final approval once it determines:

  • All key phases of organizing the bank have been completed;
  • All requirements and conditions for final approval have been met; and
  • The organizers have received any other necessary regulatory approvals. The OCC will also impose assessments on an SPNB as a condition of approval. After final approval, the OCC will supervise the SPNB, as it does all other national banks. Like all de novo institutions, newly chartered SPNBs will be subject to rigorous ongoing oversight to ensure that the bank’s management and the board of directors are properly executing their business strategy and the bank is meeting its performance goals.