OCC Concerned about Fintech for Banking Industry

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h oh, the OCC (Office of the Comptroller of the Currency) is concerned that all this new fangled fintech stuff might be too risky for the poor naive banking industry. The regulator is warning that the risks of teaming up with new technology firms and their financial technologies (fintech) might not be fully understood. The buzzword.........."Strategic Risk".......means expanding into new products and services that cut costs and help consumers is a bad thing. Yeah, progress and innovation are so scary.

(Bill Taylor, CEO)

"Be careful of the company you keep — and the technologies you use.

The Wall Street Journal

FinTech firms — which, in many cases, appeared on the landscape as banks’ competitors because of their ability to offer faster, easier access to financial services like online credit or money transfers — are now evolving into bank partners. That is a scenario, the OCC warns, that should have banks showing particular caution.

Because competition and partnerships are driving banks to take more “strategic risks,” according to the OCC, those risks are of particular interest to the banks’ regulator.

“Strategic risk is elevated, as banks make decisions to expand into new products or services, consider new delivery channels or otherwise search for sustainable ways to generate returns,” said Keith Noreika, acting comptroller. In addition, he noted his agency “will pay close attention to these key risk areas over the next six months.”

FinTech firms and their products are still new and require greater care by banks, according to the OCC’s warning, particularly when it comes to underwriting loans for consumers and small businesses.

“Credit risk is relatively stable overall,” said Noreika. “Nonetheless, we must remain vigilant.”

As the OCC warns traditional banks to be more cautious in their approach to the up-and-comers entering the field, it is also evaluating whether it will be creating the first national bank charter for FinTech firms..."