OCC Makes US Bank Readiness the Price of a FinTech Charter

The path for fintech companies to become national banks just got much harder. The Office of the Comptroller of the Currency (OCC) recently rejected two high-profile charter applications, signaling that 'technology-first' companies aren't ready for federal oversight. For retailers and operators, this means the specialized financing apps and BNPL providers you partner with will likely remain dependent on traditional bank partners rather than becoming banks themselves. The OCC is concerned that fintechs lack the deep capital reserves and risk management cultures required of national institutions. This regulatory stance maintains the status quo of 'partner banking.' Most fintech lenders will continue to sit on top of established banks like WebBank or Celtic Bank to offer their products. If you were hoping for your financing partners to lower their costs by cutting out the middle-man bank, don't expect that to happen anytime soon. The government is effectively saying that being a great tech company does not automatically make you a safe bank. Merchants should keep a close eye on the stability of their financing partners' bank relationships, as that remains the legal foundation for most consumer lending programs today.

Source: PYMNTS

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