Welcome back to Human Capital. In this week’s issue, we’re spotlighting a few of the many voices weighing in on the Treasury Department’s release Tuesday of its 222-page report calling on the Office of the Comptroller of the Currency to create a special charter for fintech companies.
The OCC followed suit the same day, announcing the bank regulator would start taking applications for national bank charters from fintech companies engaged in banking. “The federal banking system must continue to evolve and embrace innovation to meet the changing customer needs and serve as a source of strength for the nation’s economy,” said Comptroller of the Currency Joseph Otting.
What does the Treasury report say? Since the financial crisis, “a proliferation in technological capabilities and processes” has developed “increasing levels of cost effectiveness and speed.”
The use of data and mobile devices, along with the speed and expansion of information flow, “all have broken down barriers to entry for a wide range of startups and other technology-based firms that are now competing or partnering with traditional providers in nearly every aspect of the financial services industry.”
From 2010 to the third quarter of 2017, more than 3,330 new technology-based firms serving the financial services industry have been founded, 40% of which are focused on banking and capital markets, the report states.
In the aggregate, the financing of such firms has been growing rapidly, reaching $22 billion globally in 2017, a 13-fold increase since 2010.
Rep. Maxine Waters, D-Calif., ranking member of the House Financial Services Committee, noted that while she has “great hopes” for fintech firms’ ability to open up consumer access to products and services, she also has “deep concern” about adequate consumer protection being in place.
Waters also balked at the OCC providing “little opportunity” for deliberation on “this new charter regime,” and questioned OCC’s legal authority to take such a step.