Michael Hsu, the acting Comptroller of Currency (OCC), said Wednesday that banks that work with financial technology companies to offer banking services need to actively manage the risks associated with the partnerships. These fintech companies frequently partner with banks to offer checking and savings accounts to customers.
Speaking at Vanderbilt University, Hsu also said that regulators have a responsibility to ensure that banks are monitoring potential risks when working with third parties. The “exponential growth,” as Hsu put it, of these partnerships can lead to lack of clarity about who is responsible for monitoring the risk.
The Comptroller has previously raised concern over gaps in the regulation of the payments system. In late January, the OCC issued a consent order to Blue Ridge Bank, based in Virginia, for not addressing fintech partnership issues that had been previously flagged.
Hsu also noted that the OCC will accept applications for a national bank charter from fintech companies; however, they won’t give those organizations special consideration.
“We will not… lower our standards, create a special regime or take an overly expansive view of banking to entice new entrants or in the hope of bringing a particular activity into the bank regulatory perimeter,” he said.
