Who’ll Go First?

Non-bank companies may soon be competing with traditional banks in the US.

Anticipation in the fintech world is mounting over who’ll be first to apply to the US Office of the Comptroller of the Currency (OCC) for a special-purpose charter that will allow nonbanks to engage in limited banking activities. The OCC, which supervises all national banks and thrift institutions in the US, opened the application process in July 2018.

So far, no takers. Some observers believe potential applicants are reluctant to be the first to step into these untested waters, or that they are wary of being dragged into the ongoing legal dispute between the OCC and state regulators. Still, spokesperson Bryan Hubbard says the OCC is having “ongoing conversations” with potential applicants and expects the first application in Q1 this year.

Chartered fintechs would be limited to payment and loan services. They would not be able to accept deposits like traditionally chartered banks, who then get access to the Federal Reserve.

“Providing a path for fintech companies to become national banks can make the federal banking system stronger,” Comptroller Joseph M. Otting says. “It also provides consumers greater choice, can promote financial inclusion and creates a more level playing field for financial services competition.”