Comptroller Thomas Curry Releases OCC White Paper on Responsible Banking Innovation

April 1, 2016
By Daniel Cheung, MPP 2017

Thomas Curry, the U.S. Comptroller of the Currency unveiled his office’s whitepaper on responsible innovation in the banking industry and made a commitment to an ongoing process of learning and dialogue during a March 31 event hosted by the Kennedy School’s Regulatory Policy Program. This whitepaper represents a pivotal moment in regulatory strategy, particularly in the area of financial technology, or “fintech.”

The Office of the Comptroller of the Currency (OCC) is an independent bureau of the U.S. Department of the Treasury that is responsible for administering the federal banking system. The OCC charters, regulates, and supervises all of the more than 1,600 national banks and federal savings associations as well as federal branches and agencies of foreign banks. These institutions collectively make up nearly two-thirds of the assets of the commercial banking system. As the chief administrator of this office, Curry is responsible for creating policies that ensure the safety and soundness of the national banking system while encouraging competition and innovation in the industry.

In his remarks, Curry called for “responsible innovation,” which he defined as having three components. First, he said banks should both understand and manage the risks of the products that they carry. Second, Curry argued that the product should be compatible with safety and soundness that fits into bank’s strategic business plan. Finally, he proclaimed that the innovation should comply with laws and regulations, especially those aimed at protecting consumers. As technology continues to shape the banking industry, Curry said that, “The OCC will approach innovation with our eyes wide open to the attendant risks, but also an open mind to promising new ideas and new technology.”

Curry then outlined key components of the OCC’s new regulatory framework, which embraces a balanced approach that considers the upside of potential financial technologies as well as the downside of associated risks. This balance was presented as an explicit culture challenge, and Curry committed to shifting this culture through an ongoing process of learning and dialogue. He also noted that collaboration with other regulators would be required to foster innovation.

Technology and innovation are shaping the banking industry. These changes are already available to the public, as when diners split a restaurant check using a mobile app and pay with virtual currency, or a customer photographs a check to make a deposit in an online bank, Traditional banks continue to serve as a source of stability and strength in times of distress, and while innovations can improve their products and their understanding of their customers, they also create risks. Summarizing the OCC’s goals of regulation, Curry said, “Our objective is to open the door for the banks we supervise to engage in the kind of innovation that can benefit businesses and consumers, including individuals who have not been well served or – in some cases served at all – by traditional banks.”

Joseph Aldy, Associate Professor of Public Policy and Faculty Chair of the Regulatory Policy Program, moderated the presentation. The Spring 2016 New Directions in Regulation Seminar series is sponsored by the Regulatory Policy Program at the Mossavar-Rahmani Center for Business and Government.

Later in the day, Curry also participated in M-RCBG Senior Fellow Jo Ann Barefoot’s study group, “Regulation Innovation: Protecting Consumers through Technology and Trust,” which explores her book research on how technology is disrupting consumer finance and regulatory strategies that can permit beneficial change while averting new risks.

A draft of the OCC whitepaper can be found on the OCC website.


Thomas Curry, the U.S. Comptroller of the Currency

Photo courtesy of the Mossavar-Rahmani Center for Business and Government