The Office of the Comptroller of the Currency (OCC) will heighten its focus on the financial technology (fintech) space with the creation of a new department.
The Office of Financial Technology will “bolster the agency’s expertise and ability to adapt to a rapidly changing banking landscape,” the OCC announced Thursday. The new office will be led by a chief financial technology officer reporting to the senior deputy comptroller for bank supervision policy.
The office will “provide strategic leadership, vision, and perspective for the OCC’s financial technology activities and related supervision,” said the agency.
The OCC, an independent bureau of the Treasury Department, expects to establish the new office in early 2023.
“Financial technology is changing rapidly, and bank-fintech partnerships are likely to continue growing in number and complexity. To ensure that the federal banking system is safe, sound, and fair today and well into the future, we need to have a deep understanding of financial technology and the financial technology landscape,” said Acting Comptroller of the Currency Michael Hsu in a press release. “The establishment of this office will enable us to be more agile and to promote responsible innovation, consistent with our mission.”
Hsu in a speech last month said the OCC would more closely analyze risks posed by bank-fintech partnerships. Collaborations have grown at “exponential rates” and become so complicated it is often difficult to distinguish “where the bank stops and where the tech firm starts,” he said.
Banks benefit from partnerships with fintechs by getting access to tech innovation at a lower cost, while the latter benefits from affiliating with institutions with trustworthy reputations. A process to subdivide bank-fintech arrangements into cohorts that have similar safety-risk profiles is already underway at the OCC, Hsu said.
“This will enable a clearer focus on risks and risk management expectations,” he said.
Hsu previously oversaw the creation of the OCC’s new Office of Climate Risk. The office is led by Chief Climate Risk Officer Yue (Nina) Chen, who spearheads the agency’s climate risk efforts related to supervision, policy, and external engagement.