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Wolters Kluwer White Paper Assesses Recent Fintech Banking Announcements by U.S. Federal Agencies

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U.S. Treasury, OCC Announcements Promote Innovation, Present
Implications for Banks, Fintechs, Regulators, and Consumers

Wolters
Kluwer
has published "The U.S. Treasury Fintech Report and the
OCC Fintech Announcement: What They Mean for Banks and Fintechs."

The paper, intended for banking and fintech audiences, is a
straightforward summary that highlights key elements of the two
agencies' recent announcements on innovation and advancing the use of
financial technologies ("fintech") in the U.S. banking industry.

In highlighting potential impacts for banks and fintech firms, author
Stevie Conlon, Vice President, Tax and Regulatory Counsel, Wolters
Kluwer, views the July 31, 2018 pronouncements by the U.S. Treasury and
Office of the Comptroller of the Currency (OCC) as important
developments for banks, credit unions, and fintechs, with broader
implications for regulators and consumers.

The OCC
announcement
indicates that the OCC will begin immediately accepting
applications for special purpose national bank charters "from
nondepository financial technology (fintech) companies engaged in the
business of banking." This policy, Conlon explains, could reduce state
regulatory burdens for those fintechs that obtain such a charter.

Conlon explains that the OCC makes it clear that obtaining such charters
will come at a price: ongoing compliance with a host of applicable
federal and state banking laws and safety and soundness requirements, as
well as supervisory oversight. Consequently, fintechs need to carefully
consider whether a special purpose national bank charter is right for
them given the costs, expectations and ongoing responsibilities. The
paper notes that for banks, the OCC announcement raises the immediate
concern of increased competition relating to certain core banking
functions.

The 223-page U.S. Treasury report, "A
Financial System That Creates Economic Opportunities: Nonbank
Financials, Fintech, and Innovation
," is fundamentally a set of
over 80 fintech-related recommendations for federal and state regulators
and legislators to consider—and includes the OCC's decision to grant
special purpose national bank charters to fintechs. Conlon notes that it
is not clear when various steps—other than the bank charters to fintechs
provision—will actually be taken, or the extent to which the final
details will differ from the reported recommendations. Conlon writes
that banks and fintechs will need to continue to comply with existing
laws and regulations until actual changes are adopted and implemented.

State banking regulators had previously challenged the appropriateness
of national bank charters for fintechs. And new warnings have been made
since the July 31, 2018 announcements. State regulators, community
bankers, and others raise important concerns that should and will
undoubtedly be considered.

The paper concludes by noting that the July 31, 2018 announcements
acknowledge that "innovation is relentless, and the needs and desires of
consumers change. Banks, regulators and others need to adapt."

To read the entire paper, please visit U.S.
Treasury Fintech Report and the OCC Fintech Announcement: What They Mean
for Banks and Fintechs
.

About Wolters Kluwer Governance, Risk & Compliance
Governance,
Risk & Compliance (GRC) is a division of Wolters
Kluwer
, which provides legal and banking professionals with
solutions to ensure compliance with ever-changing regulatory and legal
obligations, manage risk, increase efficiency, and produce better
business outcomes. GRC offers a portfolio of technology-enabled expert
services and solutions focused on legal entity compliance, legal
operations management, banking product compliance, and banking
regulatory compliance.

Wolters Kluwer N.V. (AEX: WKL) is a global leader in information
services and solutions for professionals in the health, tax and
accounting, risk and compliance, finance and legal sectors. Wolters
Kluwer reported 2017 annual revenues of €4.4 billion. The company,
headquartered in Alphen aan den Rijn, the Netherlands, serves customers
in over 180 countries, maintains operations in over 40 countries and
employs 19,000 people worldwide.

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