FDIC’s McWilliams: De Novo Activity ‘Not Where It Should Be’

Addressing the shortage of de novo banks in the U.S. over the past several years, FDIC Chairman Jelena McWilliams today said more can be done to encourage new bank formation. “I do not profess to know what the right number of banks in the U.S. is, but I recognize that, like many competitive industries, a dynamic banking sector needs new startups entering the marketplace,” McWilliams wrote in an American Banker op-ed. “De novo banks are a key source of new capital, talent, ideas, and ways to serve customers.”

McWilliams noted that the FDIC is taking steps to encourage de novo applications, including rolling out a new application process that allows organizations to receive feedback on a draft deposit insurance application before formally submitting it and seeking public comments on additional improvements to the application process. The agency is also launching a nationwide outreach initiative to gather feedback, she said.

She added that “the FDIC is open to deposit insurance applications” from fintech firms and other players that are delivering innovative financial solutions. However, she noted that “[a]s with any other filings, these firms must meet all applicable statutory factors, as well as our standards for safety and soundness, in order to be approved for deposit insurance.”