The Office of the Comptroller of the Currency ("OCC") recently announced that it would consider applications by Fintech companies to organize a national bank to conduct their activities. This should be a wake-up call for many institutions, but particularly credit unions and other community institutions. The action by the OCC was inevitable in light of the developments in the financial services industry and makes good economic sense since electronic banking is cost effective and can reach consumers any time day or night. The OCC clearly has emerged as a leader and an enthusiast of wedding technology to the bank charter. The OCC noted that such banks, as should be the case, will be subject to the same safety and soundness standards, albeit with any modification due to the nature of their business.

The credit union industry has already suffered a well-known adverse effect of technology due to the impact of Uber on the taxi industry and medallion lenders in the New York City metropolitan area. Like many competitive threats the impact was not recognized until it was too late. The Uber effect has taken some time to take hold and now it is in full force. In fact, the term Uber has often been turned into a verb: as a credit union client of mine recently told me that he did not want to be Uberized!

Nationally chartered Fintech banks would have the ability to provide lending, deposit or payment system services individually or a combination thereof. Most likely Fintech banks will focus on payment systems and therefore will not need to be federally insured.  These banks will also carry the power of federal preemption. There are many questions that remain to be answered in this national bank development and the OCC is seeking public comment. State chartered Fintech banks are also a possibility depending upon state law.