OCC Releases Whitepaper on “Responsible Innovation”

Yesterday, the Office of the Comptroller of the Currency issued a whitepaper, Supporting Responsible Innovation in the Federal Banking System: An OCC Perspective, that introduces the agency’s principles for facilitating and regulating “responsible innovation” in the federal banking system, particularly in financial technology or “fintech.” The whitepaper primarily contemplates reforms to the manner in which the agency evaluates new product proposals from banks, as well as banks’ involvement with new technology providers. It does not address some of the critical structural limitations imposed on banks, such as activity restrictions, and it does not broach the broader question of whether new types of regulation ought to apply to new technological methods for delivering financial services, whether or not delivered by banks. Nevertheless, the whitepaper signals the beginning of a longer and broader undertaking by the OCC, banks, other financial regulators, and other market participants to develop a framework for approaching financial innovation.