On July 31, 2018 the Office of the Comptroller of the Currency (OCC) announced it will grant special purpose national bank charters to non-bank financial and fintech companies engaged in the business of banking, but not accepting deposits.1 Special purpose national banks engage in a reduced range of banking activities, target a limited customer base, incorporate non-traditional elements, or have narrowly tailored business plans.2 The OCC’s decision follows unsuccessful legal challenges by the Conference of State Banking Supervisors and the New York Department of Financial Services (NYDFS) who argued the OCC’s plan to issue the charter exceeded its regulatory authority.3 While the decision is likely to ignite similar legal challenges, it opens the possibility for fintechs to operate across the U.S. under one regulatory regime, as opposed to multiple state charters or via partnerships with national banks.  

In the absence of a national charter option, fintechs and non-bank financial firms wishing to operate as banks were required to be licensed with the relevant banking regulator in each state where they offered their products and services.4 To avoid this regulatory complexity, we have seen many fintechs instead choose to partner with traditional financial institutions to offer their products across the United States. Through these partnerships, fintechs can indirectly access the banking system while avoiding the need to be licensed and comply with the banking regulations in each state – a timely, complex, and costly process.   

Although partnerships with traditional banks and individual state licenses are still potential options for non-bank financials and fintech firms, the special purpose national bank (SPNB) charter is likely to provide non-bank financial institutions and fintech firms with a streamlined regulatory option to offer their services to consumers in all fifty states.  A streamlined regulatory regime may reduce the costs and complexity associated with needing to comply with multiple state regulatory regimes. Conversely, some fintechs may find the need to comply with a national regulatory regime too costly and burdensome. 

The OCC acknowledges the differences in business models, risks, and the potential inapplicability of certain laws between fintechs and traditional banks.5 While special purpose banks remain subject to the laws, rules, and regulations and federal supervision applicable to all national banks, the OCC acknowledges the need to tailor requirements to each business model.6 As a result, the OCC will require SPNBs to make a commitment to financial inclusion and develop and comply with a contingency plan that incorporates options to sell, wind down, or merge with a nonbank affiliate.7 In evaluating a SPNBs application, the OCC plans to carefully consider the following areas, including: (i) organizers, management, and directors; (ii) business plan; (iii) capital and liquidity; (iv) financial inclusion; and (v) contingency planning.8 

The OCC’s decision received support from in the Treasury’s report on nonbank financials, fintech and innovation which encouraged the OCC to further develop its special purpose national bank charter; however,9 there have been indications that state banking regulators will again challenge the OCC’s decision in court.  One such challenge is likely to come from the NYDFS whose superintendent, Maria Vullo, indicated her agency’s intent to again challenge the OCC’s decision.10 Despite the legal uncertainty, firms considering whether to pursue a SPNB charter should begin to make strategic choices that account for the balance between navigating multiple state regulatory regimes, including the time to apply for each license, and the potential ability to capitalize on product and service opportunities that might be afforded under a national charter. 



  1. “OCC Begins Accepting National Bank Charter Applications From Financial Technology Companies,” Office of the Comptroller of the Currency, Press release, July 31, 2018. Access at:  https://www.occ.treas.gov/news-issuances/news-releases/2018/nr-occ-2018-74.html 
  2. “Considering Charter Applications From Financial Technology Companies – Comptroller’s Licensing Manual Supplement,” Office of the Comptroller of the Currency, July 2018. Access at: https://www.occ.gov/publications/publications-by-type/licensing-manuals/file-pub-lm-considering-charter-applications-fintech.pdf 
  3. “U.S. judge dismisses state regulators’ lawsuit over national ‘fintech’ charter,” Reuters, May 1, 2018. Access at: https://www.reuters.com/article/us-usa-occ-fintech/us-judge-dismisses-state-regulators-lawsuit-over-national-fintech-charter-idUSKBN1I245A 
  4. “Payment and lending fintechs gearing up for OCC’s “fintech charter” decision,” MarketWatch.com, July 19, 2018. Access at: https://www.marketwatch.com/story/payment-and-lending-fintechs-gearing-up-for-occs-fintech-charter-decision-2018-07-19 
  5. “Considering Charter Applications From Financial Technology Companies – Comptroller’s Licensing Manual Supplement,” Office of the Comptroller of the Currency, July 2018. Access at: https://www.occ.gov/publications/publications-by-type/licensing-manuals/file-pub-lm-considering-charter-applications-fintech.pdf  
  6. Ibid 
  7. Ibid 
  8. Ibid 
  9. “A Financial System That Creates Economic Opportunities – Nonbank Financials, Fintech, and Innovation,” U.S. Department of the Treasury, July 2018. Access at: https://home.treasury.gov/sites/default/files/2018-07/A-Financial-System-that-Creates-Economic-Opportunities—Nonbank-Financi….pdf 
  10. “Vullo Renews Legal Threat to OCC Fintech Charter,” Bloomberg, June 6, 2018. Access at: https://www.bna.com/vullo-renews-legal-n73014476282/  

Newsletter Author: Venetia WooSal Cutrona
Newsletter Contact Person: Venetia Woo 

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