The US Office of Comptroller of the Currency (OCC) has released a new white paper that describes its vision for responsible innovation in federal banking system.
The paper entitled “Supporting Responsible Innovation in the Federal Banking System: An OCC Perspective”, discusses the principles that will guide the development of the OCC’s framework for evaluating new and innovative financial products and services.
While discussing the opportunities and challenges for National Banks and Federal Savings Association, the paper noted the ongoing rapid technological change in the financial services industry in the US that is aimed at meeting evolving consumer and business expectations and needs. In this context, it named the latest trending technologies including mobile payment services and mobile wallets, as well as distributed ledger technology saying:
“New distributed ledger technology has the potential to transform how transactions are processed and settled”.
The OCC’s Payments Systems Policy Group provides expertise in payments systems including traditional bank payments systems and distributed ledger technologies, it added.
In a speech, Comptroller Thomas J Curry said that not every innovation is apt for a regulated financial institution, and not every innovation that is appropriate for a regulated institution is well suited for all regulated institutions.
Recalling lessons of the 2008 financial crisis, he laid emphasis on “responsible innovation” – one that is consistent with sound risk management practices.
“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 said.
He went on to suggest the possibility of setting up a new office dedicated to innovation, similar to the innovation centers being established by some banks.
“We want to be sure we’re in a position to quickly evaluate products that require regulatory approval and identify the risks that go with them—as well as the safeguards that will be necessary to manage those risks”, he added.
