Cross River Bank, which processes payments and funds loans for fintech startups, says that if such firms got a federal charter, it could help them another way: teaching them compliance.
Gilles Gade, the CEO of the small Teaneck, N.J., bank called the fintech limited charter proposed by the Office of the Comptroller of the Currency a welcome change to the status quo.
It would present an opportunity for banks like his "to advise and prepare the fintech applicants for a limited charter, if they so choose that route," he said Tuesday in a press release.
"We believe that a top-down culture of compliance is the foundation all fintech companies venturing in the charter application process must achieve," Gade said in the release. "As the relationship between traditional banks and fintech companies evolves, it is important to not compromise the standards we set for ourselves and continue to work towards our common goal through a thoughtful and deliberate approach. This proposal is the starting point of this transformative moment of our nascent industry."
Gade added that the proposed charter would give fintechs and banks the opportunity to enter into a "constructive dialogue with regulators" that could result in some bank laws being revisited.
He said he hopes the development will further stimulate innovation by encouraging regulators to give clear and consistent guidance and providing a framework that protects consumers while promoting investor confidence.
The issues that will need to be address, Gade said, include: capital requirements; preemption; the requirements to obtain a charter; how the charter will interact will things like the Community Reinvestment Act; and frequency of exams.
Public comments on how the charter should be granted are due to the OCC by Jan. 15.