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OCC Stands Behind Coexistence of Banks, Fintechs

several-banksIn various public addresses this year, Comptroller of the Currency Thomas J. Curry has staunchly defended the importance and relevancy of banks in 2016 as financial technology firms, or “fintechs,” have become increasingly popular.

Curry warned in an address in mid-March that fintechs would not replace banks, which caused some to believe that the OCC, which regulates federal banks, was reluctant to embrace innovation in the financial industry. However, in late March, the OCC released a white paper which advocated for responsible innovation in the industry as opposed to just plain innovation.

As an example of innovation in the financial industry that did not work out as planned, Curry pointed to adjustable-rate mortgages, which could be considered an innovative financial product but turned out to be one of the main causes of the housing crisis.

Earlier this week, Curry reiterated in a public speech that his efforts to oversee fintechs are not meant to prevent innovation in the financial industry, but rather to encourage dialogue between banks and fintechs, according to the Wall Street Journal. The OCC will be holding a forum on June 23 that includes both fintechs and banks to encourage such a dialogue.

“Innovation is not free from risk, but when managed appropriately, risk should not impede progress.”

Thomas Curry, Comptroller of the Currency

Curry described the advancement of technology in the industry and conversations between banks and fintechs as a chance to “rethink how we do things.” He said in his speech that “It’s not an issue of punishing or subjecting someone to a regulatory regime. Internally, we are looking at how we can be responsive to both sides of the question—both the banks and the fintech firms and what the relative advantages and disadvantages are of existing regulations.”

The OCC is soliciting comments on the white paper the office released in late March, which is entitled “Supporting Responsible Innovation in the Federal Banking System: An OCC Perspective.” At the June 23 forum, which will be in at the Constitution Center in Washington, D.C., the OCC will discuss comments received on the white paper and lead discussions regarding financial services innovation (click here to comment on the white paper).

“At the OCC, we are making certain that institutions with federal charters have a regulatory framework that is receptive to responsible innovation along with the supervision that supports it,” Curry said. “Innovation holds much promise. It can help meet the needs of the underserved and provide better financial tools for families. It can help institutions scale operations efficiently, and it can make business and consumer transactions faster and safer. Innovation is not free from risk, but when managed appropriately, risk should not impede progress.”

Curry said of the upcoming dialogues between banks and fintechs, “We’re talking about having a fresh look at ideas, not prejudging, not saying ‘no’ from a regulatory reflexive habit—really having a dialogue in a safe place with banks and with financial-technology firms.”

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
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