In separate remarks at the Lendit USA 2017 conference on March 6, 2017, Thomas Curry, the Comptroller of the Currency, and Richard Cordray, the Director of the Consumer Financial Protection Bureau (CFPB), discussed their respective agencies’ approaches to fintech. Although neither agency head made any groundbreaking announcement, their remarks provide an up-to-date summary of the agencies’ fintech initiatives. In his address, the Comptroller explained the basis for the issuance by the Office of the Comptroller of the Currency (OCC) of a national bank charter for fintech companies and described the agency’s Office of Innovation. In his speech, Director Cordray discussed the CFPB’s Project Catalyst and the agency’s recent Requests for Information on third party access and use with consumer authorization of personal information maintained by consumers’ financial institutions and on the use of “alternative data” in consumer loan underwriting.
As part of his remarks on the OCC’s plan to make national bank charters available to fintech firms that offer banking products and services, Comptroller Curry addressed three concerns that have arisen. First, he explained the OCC’s authority to issue such a charter, observing that the agency could issue a charter to an institution limited to certain aspects of banking and that deposit-taking was not an essential feature of a national bank charter. Second, he rejected the notion that the OCC would provide “light-touch supervision” to a fintech national bank. Finally, he stated that the OCC would not approve an application that presented a mixing of banking and commerce.
The Comptroller also provided an update on the OCC’s creation of an Office of Innovation to serve as the contact point in the agency for fintech products and services. The Office will reach out to innovators, provide technical assistance, and make candid regulatory advice more accessible by holding “office hours” in cities with a significant fintech presence.
In his remarks, Director Cordray covered three projects at the CFPB.
First, the CFPB continues to evaluates pilot programs for new, technology-driven products and services. As part of Project Catalyst, the CFPB will grant no-action letters under which CFPB staff would not recommend enforcement or supervisory action based on specific innovations in a pilot program for a fixed period of time.
Second, in November 2016, the CFPB issued a Request for Information on consumer authorization of third parties to access and use consumers’ personal data that are maintained by consumers’ financial institutions. The CFPB has received about 70 comments on the issue, and, according to Director Cordray, at this point is “look[ing] forward to further productive engagement with all parties.”
Third, in February 2017, the CFPB issued another Request for Information about the benefits and risks of using “alternative data” to assess the creditworthiness of applicants for consumer loans. While this RFI is still in its early stages, Director Cordray “see[s] promise in some consumer-friendly innovations” and is “encouraged by the potential for alternative data underwriting to benefit the very consumers that the fair lending laws are designed to protect.”