Are Fintech Companies a Step Closer to Getting a Nonbank Charter?

Pushing the agenda further on a limited-purpose charter for non banks, the head of the Office of the Comptroller of the Currency (OCC) Thomas Curry at an industry event on Tuesday said that the bureau is investigating “unique risks” that fintech companies might pose to the banking system and the economy.

Curry said that the true test for the industry will come under a “less favorable credit cycle.”

He revisited the topic of creating a limited-purpose charter for fintech companies akin to credit card banks and other non-deposit taking entities. The agency which was evaluating its authority to extend the same status to fintech companies might be a step closer. Should that happen, “the institutions who receive the charters will be held to the same strict standards of safety, soundness and fairness that other federally chartered institutions must meet,” Curry was quoted as saying in Reuters.

Short of advocating for a charter, the Innovative Lending Platform Association (ILPA) with companies such as Kabbage, OnDeck and CAN Capital have suggested a licensing system that would eliminate the duplicative patchwork of federal and state laws. 

Apart from this, fintech companies have also urged regulators to put up a united front by coordinating better among themselves and to take a principle-based approach instead of a rules-based one.