OCC Adopts Policy Statement On Fintech Eligibility For US National Bank Charters

The Office of the Comptroller of the Currency (OCC) announced July 31, 2018, that it will begin accepting national bank charter applications from financial technology companies. In December 2016, the OCC initiated a public comment process concerning fintech charters that culminated with the July 31, 2018, issuance of a Policy Statement on Financial Technology Companies' Eligibility to Apply for National Bank Charters (Policy Statement) and a related supplement to the Comptroller's Licensing Manual (Supplement).

In the Policy Statement, the OCC explains that it is the policy of the OCC to consider applications for national bank charters from companies conducting the business of banking, provided they meet the requirements and standards for obtaining a charter. This policy now includes considering applications for special purpose national bank (SPNB) charters from financial technology companies that are engaged in the business of banking but do not take deposits.

Reflecting opposition expressed by state regulators and their trade associations during the public comment period, in the Policy Statement the OCC went out of its way to underscore its authority to charter SPNBs. It notes that the National Banking Act gives the OCC broad authority to grant charters for national banks to carry on the "business of banking," which includes receiving deposits, paying checks or lending money. In addition, the OCC regulations provide that a SPNB must conduct at least one of these three core banking functions. Thus, the OCC has the authority to grant a national bank charter to a fintech company that engages in one or more of those core banking activities. Litigation brought by the New York State Department of Financial Services (NYDFS) to block the OCC's ability to issue SPNB charters to fintech companies was dismissed in December 2017 on the basis that the NYDFS claims were not ripe as the OCC had not yet decided whether to accept applications or issue any charters. Now that the OCC has indicated that it will accept SPNB charter applications, it is likely that the NYDFS, possibly joined by other state regulators, will reinstate its litigation.

In clarifying its intention to exercise SPNB chartering authority, the OCC recognizes the importance of supporting responsible innovation in the federal banking system to better enable the system to:

evolve to meet the needs of the consumers, businesses and communities it serves; operate in a safe and sound manner...