OCC Publishes Framework for Responsible Innovation

The OCC will create an office dedicated to responsible innovation and take steps to provide technical assistance to banks as part of its ongoing effort to support the safe exploration of new technologies and practices in financial services, the agency announced today.

“The OCC supports responsible innovation that enhances the safety and soundness of the federal banking system, treats customers fairly, and promotes financial inclusion,” said Comptroller of the Currency Thomas Curry. “By establishing an Office of Innovation, we are ensuring that institutions with federal charters have a regulatory framework that is receptive to responsible innovation and the supervision that supports it.”

ABA had previously encouraged the OCC to leverage its knowledge of the banking system to create a central resource to facilitate innovation, particularly for community banks that may not have the resources to hire their own internal expertise. Through this new office of innovation, the agency will facilitate requests and inquiries from banks and other industry stakeholders, direct research and outreach efforts, monitor trends and developments in financial services and collaborate with other agency partners. The OCC said it will place “innovation officers” in New York and San Francisco, as well as in the OCC’s headquarters in Washington, D.C. In addition, the agency said it would work to improve staff awareness and expertise about innovation across the organization.

Also in response to ABA’s recommendations, the OCC made a commitment to providing technical assistance to banks in the form of resource materials on regulatory principles, process and expectations, as well as success stories and lessons learned. This assistance would include help for community banks in developing innovation strategies and better managing relationships with third party vendors. While the framework stopped short of establishing a regulatory “sandbox,” it acknowledged widespread industry support for a process that would provide banks and fintech companies a way to test innovative products, services and processes. The OCC said that it would develop an optional program that would allow the agency to participate in bank-run pilot programs.

ABA President and CEO Rob Nichols today welcomed the OCC’s commitment to helping banks innovate safely and successfully. “The OCC’s efforts to test innovative financial products in a controlled environment are a step in the right direction,” Nichols said. “Ultimately, banks should be able to pursue innovative initiatives to serve their customers in an environment that provides regulatory flexibility and clarity. We look forward to continuing our collaboration with OCC to ensure banks remain leaders of financial innovation.”


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