Brian Brooks, the acting Comptroller of the Currency took over the role from Joseph Otting on May 29, 2020, and wasted no time in making his mark on the regulatory agency, announcing his intentions to bring FinTech to the forefront of the agency’s priorities. The Office of the Comptroller of the Currency (OCC) primarily serves to supervise, regulate, and charter national banks, including financial institutions such as Wells Fargo and JP Morgan Chase. With Brooks at the helm, the agency not only proposed the “true lender” rule, which clarifies relationships between banks and third-parties, such as a marketplace lender, but also a “payments charter”, a special purpose national bank charter for payments companies.
The Payments Charter has the ability to bring FinTechs into the consumer mainstream. Payment companies would have the prestige of a national charter under the supervision of the OCC, giving consumer confidence in their services. So for Version 1.0 of the Payments Charter, Brooks laid out a national version of a state money transmission license that provides the advantage of a national platform with pre-emption from the states. There are significant advantages for payment companies to operate under a federal charter rather than a smattering of state money transmitter licenses. Operating under a state-by-state basis, a payments company would need to handle varying requirements, resulting in consequential operational challenges.
Brooks’ experience in the FinTech industry, having recently held the role of Chief Legal Officer at Coinbase and sat on the board of directors of Avant, Inc., a marketplace lending and technology platform company, bodes well for the FinTech industry. In his initial statement since becoming acting Comptroller of the Currency, Brooks said “we should support banks’ use of new technology, products, and models that safely and fairly accelerate the velocity of money, create greater financial inclusion and empower consumers and businesses with more control over their financial affairs.”
As innovation is a “personal passion” of his, it will be fascinating to see how the OCC leads the way in financial innovation and digital technology in the banking industry. According to an Accenture study, with $500 billion in incremental revenue from the payments industry up for grabs over the next 6 years, the payments industry is increasingly competitive. Recent acquisitions from Visa and Mastercard, two incumbent players in the payments market, further highlight this cutthroat nature.
With the pandemic accelerating the digital first nature of banking, it is important that FinTech’s continue to innovate and are appropriately regulated in order to best serve the American consumer.
