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Notwithstanding objections from both parties of the US Congress and state banking regulators, the Office of the Comptroller of the Currency (OCC) is moving forward with its proposal to accept applications from financial technology companies for a special purpose national bank charter (FinTech Charter) and has issued draft guidelines (FinTech Charter Guide) for its evaluation of FinTech Charter applications.

We have previously discussed the OCC’s FinTech Charter proposal and its somewhat rocky path (read our previous posts on the topic here and here). The OCC is inviting comments on the draft through April 14, 2017, although we do not expect the final version of the guide to deviate significantly from the current draft.

Similarities to Traditional National Bank Charters

A key takeway from the FinTech Charter Guide is that a FinTech Charter application will be reviewed and approved in a process that is very much like that used by the OCC for a traditional national bank charter:

  • The application process for a FinTech Charter mirrors that of a traditional national bank, including pre-filing discussions with the OCC, use of the Interagency Biographical Report for background checks on key personnel and owners (which includes fingerprinting), and the requirement to submit a detailed business plan.
  • Activities for a FinTech Charter are limited to those permissible for national banks and must include one of three core banking activities—taking deposits, paying checks, or lending money.
  • The OCC will use its existing guiding principles in evaluating FinTech Charter applications to ensure that each applicant’s charter is consistent with
    • maintaining a safe and sound banking system;
    • encouraging a national bank to provide fair access to financial services by helping to meet the credit needs of its entire community;
    • ensuring compliance with laws and regulations; and
    • promoting fair treatment of customers, including through efficiency and better service.
  • As with traditional national banks, the OCC will evaluate whether the applicant’s organizers and management have the appropriate skills and experience and if the applicant has sufficient capital to support the projected volume, type of business, and proposed risk profile.
  • Once a Fintech Charter is granted, a company with the charter will be subject to minimum leverage and risk-based capital requirements and a supervisory framework similar to that imposed for de novo traditional national banks, as well as the same risk management framework that the OCC applies to traditional national banks.
  • If an applicant is required to obtain federal deposit insurance, it will have to apply to the Federal Deposit Insurance Corporation for deposit insurance.

Business Plan Requirements

The FinTech Charter Guide places a large focus on the business plan that must be submitted by an applicant. The business plan must include

  • an operational risk assessment and a clear statement of the organization’s risk appetite;
  • a detailed description of the company’s systems for customer recordkeeping and transaction processing, as well as a description of its compliance management program and other controls (e.g., information technology, independent testing, third party risk management);
  • proposed initial minimum capital levels as well as capital levels the enterprise will adhere to after it reaches its financial profitability goals;
  • methods for monitoring and revising the business plan;
  • contingency plans, recovery planning, and exit strategies; and
  • an indication of how the applicant will provide fair access to financial services and promote fair treatment of customers consistent with safe and sound operations, including goals, approach, activities, and milestones for achieving the same.


Many if not all of the requirements for applying for, obtaining, and operating a FinTech Charter will be new for fintech companies. Applying for and obtaining a FinTech Charter will be a substantial and potentially lengthy undertaking for any fintech company, and one that will require a good deal of thought, planning, and analysis. Moreover, the business priorities, organizational infrastructures, and systems that drive at least some potential FinTech Charter applicants’ activities may not neatly align with the OCC’s regulatory and supervisory expectations.

In sum, we continue to believe that it is premature to celebrate the FinTech Charter as the next step in fintech innovation and growth.