On June 23, 2016 the Office of the Comptroller of the Currency (OCC) hosted the Forum on Responsible Innovation in the Federal Banking System in Washington, D.C. Hundreds of industry stakeholders gathered to discuss “Responsible Innovation,” fintech, and the role of the OCC in regulating the financial industry as it evolves.  The forum addressed reaction to the OCC’s whitepaper, released in March, and subsequent comment letters. The OCC stated that it will encourage banks to pursue fintech initiatives in a manner that is consistent with the banks’ strategic plans and risk management responsibilities.

A fundamental focus of the forum was defining “Responsible Innovation.”  The OCC defines Responsible Innovation to include innovative products, processes, and services that meet the changing needs of consumers, businesses, and communities. Among the major challenges facing banks and fintech companies in the near future are the lack of regulatory clarity, uniformity, and pragmatism; that is, firms that seek to churn-out innovative fintech products rapidly and deploy them on a nationwide basis face significant obstacles to doing so.  Often, they must obtain state licenses and other approvals and they must grapple with federal and state requirements that were not designed for and do not fit their products well. Currently, the OCC is exploring various options to help banks overcome these obstacles, including by creating an office devoted to fintech, chartering certain fintech companies as banks, and proposing gap-filling regulatory updates to mitigate uncertainty in the banking industry when banks partner with fintech companies.

Having now heard the thoughts of industry stakeholders through comment letters and the forum, it is likely that the OCC will begin to propose standards in the near future that will be applicable to fintech.  Early guidance will probably target payment services companies, with later guidance moving to address issues in online lending and other areas.  The OCC could ensure adherence to its objectives, and monitor fintech, by relying on its Risk Management Guidance (Bulletin 2013‑29), which governs relationships between banks and third parties.

Although fintech is facing regulatory uncertainty presently, it is apparent that the OCC is willing to be the primary regulatory agency to provide more clarity and certainty applicable to banks that partner with the rapidly evolving and expanding fintech sector.