Eugene Grygo, Chief Content Editor, FTF News
The Office of the Comptroller of the Currency (OCC) quietly let it be known that it is creating an office “dedicated to responsible innovation” that will build a formal framework to help the agency “identify, understand, and respond” to the growing number of FinTech changes impacting the federal banking system.
Citing the exponential growth of FinTech as a driver, the Office of Innovation to come is slated to begin operations in the first quarter of 2017, and will be headed by Beth Knickerbocker, who was named the acting chief innovation officer (CINO), officials say.
While the new group will be based in the OCC headquarters in Washington, D.C., Knickerbocker will oversee “a small staff located in Washington, New York, and San Francisco,” according to the OCC. “The office will be the central point of contact and clearinghouse for requests and information related to innovation.”
OCC officials add that the new group will be tasked with:
- establishing an outreach and technical assistance program for banks and nonbanks;
- conducting awareness and training activities for OCC staff;
- encouraging coordination and facilitation;
- establishing an innovation research function, and
- promoting interagency collaboration.
While much of what is in the FinTech category is for consumer banking, the OCC does intend to keep an on technologies that are becoming near and dear to firms working in capital markets. “Fintechs also are leveraging new technologies and processes, such as cloud computing, application programming interfaces, distributed ledgers, artificial intelligence, and big data analytics,” according to the OCC.
The OCC will be hiring to improve its expertise in the “rapid technological and engineering developments in the financial industry,” OCC officials say.
The regulator will be reaching out to those with skills that include “engineering, advanced information technology, systems development, cybersecurity, statistics, and mathematical modeling,” according to the OCC. “In addition, the OCC should recruit specialists and use the office fellowship program to supplement expertise in specific areas. The OCC should enhance its specialty skills program through additional functions related to innovation and technologies (e.g., cloud-based computing, distributed ledger technology, and model risk management) and expand the current list of OCC-sponsored certifications to encourage staff to build expertise related to innovation.”
Perhaps the best news is that the group will be leveraging existing interagency channels, according to the OCC, which stresses that it “routinely collaborates with the other federal banking agencies as well as many other agencies.”
In fact, the director of bank information technology for the OCC serves as a co-chair of the Basel Committee’s Task Force on Financial Technology (TFFT). “The team recommends that the OCC leverage these channels to discuss innovation in the industry. The focus of collaboration should be to share information to increase knowledge, develop consistent approaches, where appropriate, and provide a clear message to the industry,” according to the OCC.
“The OCC should also continue to leverage relationships it has with international regulators, such as the United Kingdom’s Prudential Regulatory Authority and Financial Conduct Authority, and continue to take a leadership role, as appropriate, in international working groups. The office could also liaise with counterparts of other agencies and international regulators,” officials add.
The new team will “establish an OCC-led innovation information-sharing group consisting of domestic and international regulators” to “share information and promote responsible innovation,” according to the OCC.
This is a fairly proactive step by the OCC to stay on top of inventions and technology that threaten to outpace it. But the idea that a regulator could facilitate more than punishment and fear is intriguing.
Need a Reprint?