April 1, 2016

OCC Releases White Paper on FinTech and Innovation in the Banking System

On March 31, 2016, the Office of the Comptroller of the Currency (OCC) released Supporting Responsible Innovation in the Federal Banking System: An OCC Perspective (White Paper). The document, which reflects themes developed in the course of an OCC initiative that began in August 2015, solicits comments on a number of questions. Simultaneously, the OCC announced that it will host a forum on responsible innovation at Constitution Center in Washington, DC on June 23.

Although the White Paper refers to innovation in the federal banking system, many of the innovations and related issues have arisen outside of the federal and state banking system. Among other innovations, the White Paper makes reference to mobile payment services, distributed ledger technology, the use of smart and portable electronic devices, automated advisory services, crowdfunding and marketplace lending.

The various banking and nonbanking financial communities are urged in the White Paper to coordinate their efforts in order to complement each other’s advantages and disadvantages. The OCC itself intends to support “responsible” innovation by leveraging its own expertise, fostering receptivity to innovation, collaborating with other regulators and encouraging collaboration among all parties, while simultaneously protecting the goals of financial fairness and effective risk management. Among other things, innovation and how to respond to it will become a component of the bank-examination process, which will be supplemented by staff with the necessary expertise.

The White Paper emphasizes the importance of providing fair access to financial services. This concept is described as including the provision of better online and mobile banking and financial management tools, increasing the availability of small consumer and business loans, the consolidation and refinancing of consumer and student loans, the use of new models for determining the eligibility of borrowers and better payment services. The OCC may issue guidelines on some of these issues as they relate to community reinvestment and low- to moderate-income individuals.

The OCC’s discussions since August 2015 indicate the high level of importance accorded to managing cyber risks, which are seen as arising from new technologies, data aggregation and sharing and business combinations. In footnotes, the White Paper provides links to guidance that the OCC has already provided on these and related issues.

The White Paper mentions the progress already achieved in coordinating with the Consumer Financial Protection Bureau and other federal banking agencies and reducing regulatory burdens. It also lists some additional efforts the OCC hopes to undertake, in particular with regard to sharing information, trying to provide better advance notice and attempting to avoid inconsistent communication.

The White Paper concludes by soliciting comments on nine issues. These relate to both the challenges faced by large and small financial institutions and to possible responses to those challenges, such as making organizational improvements at the OCC, providing better resources that the financial community can use and formulating better approaches to innovation.

Comments are due by May 31. Submissions should be e-mailed to The comments will be discussed at the June 23 forum.

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