Hsu's comments follow recent regulatory actions, including a consent order issued to Blue Ridge Bank for failing to address issues related to its FinTech partnerships. The Office of the Comptroller of the Currency (OCC) has also issued two consent orders related to bank-FinTech partnerships in January. Hsu clarified that while the OCC is open to FinTech companies applying for a national bank charter, they will not receive special treatment. The OCC has also identified the use of artificial intelligence in banking as an emerging risk.
Key takeaways:
- Acting Comptroller of the Currency, Michael Hsu, emphasized the need for banks to manage risks associated with their partnerships with FinTech companies, highlighting the potential for unclear risk-monitoring responsibilities.
- Hsu has expressed concerns about gaps in the regulation of the payments system and the need for regulators to ensure that banks are monitoring for risks stemming from these partnerships.
- While the Office of the Comptroller of the Currency (OCC) is open to applications from FinTech companies for a national bank charter, Hsu clarified that these firms will not receive special treatment and the regulator is committed to maintaining high standards.
- The OCC has identified the use of artificial intelligence (AI) in banking as an emerging risk, noting that while AI offers significant benefits, its widespread adoption may also present challenges related to compliance risk, credit risk, reputation risk and operational risk.