The Office of the Comptroller of the Currency should proactively support responsible community bank digitalization through transparency, information sharing and meaningful dialogue with stakeholders, the American Bankers Association said today in a letter to the agency.
The OCC in May issued a request for information on the key challenges and barriers faced by community banks in the adoption and implementation of digital banking solutions. In its response to the request, ABA outlined several of the challenges community banks face in technology adoption and ways regulators could help.
“Today, community banks face a unique set of challenges, including nonbank competition, talent recruitment, and sustaining a beneficial relationship with core technology providers (‘cores’),” ABA said. “New and emerging technologies can both be the driver of these challenges and serve as important tools for community banks to remain competitive, meet customer demand, increase revenue and improve efficiency. In most cases, community banks must rely on external parties, including their cores and fintechs, to provide new technology and support innovation because they do not have the resources or internal expertise to develop these technologies independently.”
To help community banks, ABA recommended the OCC:
- Conduct risk-based examinations of third parties pursuant to the Bank Service Company Act.
- Provide transparency on “significant service providers” and related exam findings.
- Proactively share information on examination trends and regulatory concerns.
- Engage in meaningful, development-stage dialogue with all stakeholders.
- Conduct robust external education and outreach.
ABA also cited Treasury Secretary Scott Bessent’s efforts to coordinate with federal banking regulators to streamline oversight and ease regulation.
“The OCC should take heed and actively coordinate with other federal banking regulators when developing guidance or regulations that affect community banks,” ABA said. “A unified approach helps prevent overlapping or duplicative regulatory requirements and promotes consistency in supervisory expectations.”
