Fintech Keys, Trends
Long drawn out Process
Fintech companies had welcomed a special bank charter that cleared a quicker path for them to become a bank. But that was shut down in October after a federal district court in New York decided that the Office of the Comptroller of the Currency, the regulator issuing the charters, didn’t have the authority to do so. That also meant that finance start-ups will have to go through the same drawn out process as everyone else.
Senators protect Bank Interests deregulating them
Legislative branch tightly regulating fintech
Robinhood had to back off from 3% cash deposits on not getting FDIC. It announced it would re-launch and re-name the product, catching the attention of U.S. senators in the process who said they were “concerned” that Robinhood and other fintech companies may be dodging regulatory scrutiny.
Recent 11/28/19 move by Robinhood to pull its request for a national OCC banking charter highlights the struggles a tech company can face when trying to upend the financial system.
Traditional Bank "Partners"
Banks become gateway - hurdle to fintech innovation
Fintech has the ability to offer many of the same products as Wall Street firms, without the same regulatory requirements, through partner banks. Teaming up with FDIC-insured banks to handle customer deposits is a popular set-up for tech companies in financial services.
US: Paypal only works through Banks - gets ACH access to charge credit card fees!
Apple Card - simple stupid private label deal
Apple and Goldman Sachs are the most high-profile example of that teamwork with the launch of the Apple Card. Google and Citi are also partnering to launch a Google-branded debit account.
Office of the Comptroller of the Currency OCC
Getting Banking Licenses - In the future
US: Varo Money, mobile Banking - first fintech to get national bank charter
It made history as the first fintech to receive preliminary approval for a national bank charter from the OCC. They still need full approval from the agency, as well as FDIC approval, according to the CEO.
US: Robinhood pulls request for charter
The start-up handles the app and customer experience, while the bank holds customer deposits and offers commission-free stock and cryptocurrency trading.
No longer looking to become a federally insured bank.
- 11/27/19 Said it was voluntarily pulling its bank charter application with the Office of the Comptroller of the Currency, which was submitted earlier this year.
It also launched a cash management account almost a year after the botched announcement of what it called a checking and savings account with a 3% interest rate.
A source familiar with Wednesday’s announcement said the charter withdrawal does not reflect a change in the company’s product plans.
US: Square applies for Industrial Banking License
Square has applied for a special industrial loan company license with the FDIC which allows less traditional financial firms to accept government-insured deposits.