On November 3, 2016, Comptroller of the Currency Thomas J. Curry spoke at Chatham House in London about responsible innovation and Office of the Comptroller of the Currency (OCC) efforts to address financial technology. Comptroller Curry began his speech by noting the rapid growth of the “fintech” sector and how banks, like taxis, could face an “Uber moment” if banks fail to embrace changes in technology and demographics.
If Uber turned your smartphone into a taxi dispatch, fintech is turning your phone into a financial advisor, a loan officer, a money transmitter, and an automated teller.” -Comptroller Curry
But, as noted by Comptroller Curry, banks are different than taxis. Banks provide critical financial infrastructural and are systematically important in ways that taxis are not. Banks are responding to the technological revolution by creating innovation laboratories of their own, investing in promising applications (like distributed ledger technology) and collaborating with fintech startups. In response to the growing intersection of banks and technology, in March 2016, the OCC published its views on Supporting Responsible Innovation in the Federal Banking System and recently developed its Responsible Innovation Framework. Comptroller Curry’s speech in London provided two key updates on the OCC’s efforts to encourage responsible innovation.
Comptroller Curry made it clear that he doesn’t support regulatory “safe spaces” that would allow companies to try out new financial products and services without risk of penalty. Instead, companies should seek guidance from regulators when developing a pilot to test new products. Comptroller Curry mentioned that the OCC’s new Office of Innovation may assist companies in creating responsible pilots by acting as the central point of contact and clearing house for requests.
Unfortunately, Comptroller Curry did not provide much new information about the OCC’s proposed new limited-purpose charter intended to facilitate financial technology. He did state that, if the OCC decides to grant a “fintech” charter, any institutions under such charter will be held to the same high standards of safety, soundness, and fairness as other federally chartered institutions. While this would appear to discourage the innovation that the OCC hopes to facilitate, it does put the “taxis” trying to disrupt financial services on the same regulatory field as banks responding to the technological revolution.
The complete text of Comptroller Curry’s speech at Chatham House in London is available here.