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  • Wolters Kluwer White Paper Assesses Recent Fintech Banking Announcements by U.S. Federal Agencies

    Aug. 13, 2018

    U.S. Treasury, OCC Announcements Promote Innovation, Present Implications for Banks, Fintechs, Regulators, and Consumers 

    Wolters Kluwer has published The U.S. Treasury Fintech Report and the OCC Fintech Announcement: What They Mean for Banks and Fintechs.” The paper, intended for banking and fintech audiences, is a straightforward summary that highlights key elements of the two agencies’ recent announcements on innovation and advancing the use of financial technologies (“fintech”) in the U.S. banking industry.

    In highlighting potential impacts for banks and fintech firms, author Stevie Conlon, Vice President, Tax and Regulatory Counsel, Wolters Kluwer, views the July 31, 2018 pronouncements by the U.S. Treasury and Office of the Comptroller of the Currency (OCC) as important developments for banks, credit unions, and fintechs, with broader implications for regulators and consumers.

    The OCC announcement indicates that the OCC will begin immediately accepting applications for special purpose national bank charters “from nondepository financial technology (fintech) companies engaged in the business of banking.” This policy, Conlon explains, could reduce state regulatory burdens for those fintechs that obtain such a charter.

    Conlon explains that the OCC makes it clear that obtaining such charters will come at a price: ongoing compliance with a host of applicable federal and state banking laws and safety and soundness requirements, as well as supervisory oversight. Consequently, fintechs need to carefully consider whether a special purpose national bank charter is right for them given the costs, expectations and ongoing responsibilities. The paper notes that for banks, the OCC announcement raises the immediate concern of increased competition relating to certain core banking functions.

    The 223-page U.S. Treasury report, “A Financial System That Creates Economic Opportunities: Nonbank Financials, Fintech, and Innovation,” is fundamentally a set of over 80 fintech-related recommendations for federal and state regulators and legislators to consider—and includes the OCC’s decision to grant special purpose national bank charters to fintechs. Conlon notes that it is not clear when various steps—other than the bank charters to fintechs provision—will actually be taken, or the extent to which the final details will differ from the reported recommendations. Conlon writes that banks and fintechs will need to continue to comply with existing laws and regulations until actual changes are adopted and implemented.

    State banking regulators had previously challenged the appropriateness of national bank charters for fintechs. And new warnings have been made since the July 31, 2018 announcements. State regulators, community bankers, and others raise important concerns that should and will undoubtedly be considered.

    The paper concludes by noting that the July 31, 2018 announcements acknowledge that “innovation is relentless, and the needs and desires of consumers change. Banks, regulators and others need to adapt.”

    To read the entire paper, please visit U.S. Treasury Fintech Report and the OCC Fintech Announcement: What They Mean for Banks and Fintechs. 

    About Wolters Kluwer Governance, Risk & Compliance

    Governance, Risk & Compliance (GRC) is a division of Wolters Kluwer, which provides legal and banking professionals with solutions to ensure compliance with ever-changing regulatory and legal obligations, manage risk, increase efficiency, and produce better business outcomes. GRC offers a portfolio of technology-enabled expert services and solutions focused on legal entity compliance, legal operations management, banking product compliance, and banking regulatory compliance.

    Wolters Kluwer N.V. (AEX: WKL) is a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. Wolters Kluwer reported 2017 annual revenues of €4.4 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide.


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