The Independent Community Bankers of America said that it agrees with the Office of the Comptroller of the Currency's support for "responsible innovation" in fintech but that it worries marketplace lenders have a "regulatory advantage."

Community banks are "subject to an unprecedented level of regulation and supervisory review that regulators continually point to as a signal of great financial strength in the vast financial services industry," the ICBA said in a comment letter to the Comptroller's Office. The regulatory framework for online lenders should be "no less stringent than the framework that applies to community banks," it said.

The ICBA, which represents more than 6,000 community banks, said concerns about regulatory scrutiny make community banks reluctant to adopt online small-dollar lending services.

"The opportunities in this space lie not with banks but with the regulators themselves, who need to give community banks the flexibility to lead the path to common sense small dollar lending both through rapid fire online solutions and inperson relationship-based credit lines," the letter says.

The ICBA recommended that regulators streamline due-diligence requirements for relationships with third-party technology service providers.

"Regardless of the excitement around the prospect of innovative banking in communities across the country, the biggest barrier to future innovation for community banks is the regulatory burden these institutions face on a daily basis," the ICBA said in the letter.

The May 31 letter was in response to a discussion paper from the Comptroller's Office titled "Supporting Responsible Innovation in the Federal Banking System: An OCC Perspective."