The Office of the Comptroller of the Currency (OCC), a regulator of the U.S. banking system, has revealed plans about establishing an office dedicated to responsible innovation and implement a formal framework to improve the agency’s ability to identify, understand, and respond to financial innovation affecting the federal banking system.

In a report titled, “Recommendations and Decisions for Implementing a Responsible Innovation Framework”, the OCC has provided a summary of the financial services landscape and its innovation initiatives, along with the approved recommendations for the OCC’s Framework for Responsible Innovation, including the Office of Innovation and other key elements.

“Today, fintechs engage in the traditional banking functions of consumer lending, payments, wealth management, and settlements. Fintechs also are leveraging new technologies and processes, such as cloud computing, application programming interfaces, distributed ledgers, artificial intelligence, and big data analytics”, the report said.

The OCC recognises the need for it to enhance its specialty skills program through additional functions related to innovation and technologies such as 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.

“The OCC supports responsible innovation that enhances the safety and soundness of the federal banking system, treats customers fairly, and promotes financial inclusion,” said Comptroller of the Currency Thomas J. Curry. “By establishing an Office of Innovation, we are ensuring that institutions with federal charters have a regulatory framework that is receptive to responsible innovation and the supervision that supports it.”

According to the official announcement, the Office of Innovation will be headed by a Chief Innovation Officer assigned to OCC Headquarters with a small staff located in Washington, New York, and San Francisco. The office will be the central point of contact and clearinghouse for requests and information related to innovation.

In addition, the office will also implement other aspects of the OCC’s framework for responsible innovation, which include 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.

The OCC expects the office to begin operations in first quarter 2017. To support implementation of the framework, the agency has named Beth Knickerbocker acting Chief Innovation Officer. It further plans to publish a paper later this year discussing the issues associated with establishing a special purpose charter and seeking comment on the topic.