[Editor’s note: This is a guest post from Alex Cooper, Founder and CEO of Rezzcard. Alex is a fintech innovator and social impact entrepreneur focused on delivering financial services through technology to promote financial inclusion.]
I recently attended the MPL Summit in Washington DC. It was the first ever policy conference for the Marketplace Lending (MPL) Industry hosted by Boston University Center for Finance, Law & Policy and Cross River Bank. The goal of this inaugural event was to create a dialog and consensus among industry participants including online lenders, banks, consumer advocates and regulatory agencies. The desired outcome is a framework that would lead to best practices and proposed guidance to regulators for supporting responsible innovation in marketplace lending.
I am fascinated by the MPL industry, how fast it has grown, its dynamism in creating new lending models and ability to leverage the capital markets to fill the void in the consumer and small business lending sectors.
I was surprised by two things I observed at the MPL summit. First, only three banks were in attendance including the host organization. Second, one of the main federal banking regulators, the Office of the Comptroller of the Currency (OCC) and its leader Thomas Curry, announced that that they were exploring the possibility for granting limited-purpose bank charters to fintech companies engaged in banking activity. In his remarks, Curry said;
If a firm merited a federal bank charter, the question would be resolved as it would be squarely under the primary federal supervision of the OCC…. Some have suggested that federal charters could ensure that fintechs engaging in banking activity receive rigorous, bank-like federal regulation and ongoing supervision.
The following link will give you access to the full text of his remarks.
The talk of regulating fintechs has been in the air for a while. In fact, fintechs are subject to a myriad of regulations, the same as banks or other companies that lend money or are in other money service businesses. But making them federally regulated through a bank charter, in my opinion that’s a bombshell! [Read more…]