LAS VEGAS – Office of the Comptroller of the Currency chief Thomas Curry said Thursday that banks have reached a do-or-die moment and it is up to them to keep up and outinnovate nonbank rivals.

"Technology ... will determine the success or failure of banks going forward," Curry said answering a question at the American Banker Retail Banking Conference here.

The OCC released a white paper this month embracing innovation and technology in the banking space but said it must be done in a way that does not put the financial system at risk. "Regulated banks aren't the only show in town when it comes to financial services and your competitors are taking advantage of every opportunity to get a leg up on you," Curry warned during his prepared remarks.

With many consumers now banking electronically and nonbanks now offering banklike services, "it's not unreasonable to ask if it matters to consumers of financial products or to the financial system as a whole whether innovation occurs inside a regulated bank."

But Curry argued it does.

"It does matter, both to the system and to the individual consumer" because banks offer deposit insurance to customers and are regulated for safety and soundness, he said.

Curry said regulators like the OCC also need to be receptive to new ideas.

"It's important that regulators are open to the changes that are underway in both technology and business practices, and that we are able to evaluate both the risks and the opportunities that innovation presents," Curry said, noting that innovation does not just mean new technology.

He pointed to recent proposed guidance that would allow federal banks to extend high loan-to-value mortgages in neighborhoods undergoing revitalization and positioned to increase in value.

"As you know, high-LTV loans are typically anathema to regulators, so the proposal required us to look at the issue with new eyes," Curry said. "Our view was that while high-LTV loans carry risk, that risk is manageable, especially when balanced against the urgency of addressing the problem of blighted neighborhoods."

Curry also encouraged banks to use the OCC as a resource, saying that "we are ready to bring to bear the considerable expertise of our staff to support banks and to develop and obtain additional expertise in emerging technology as needed."

Taking questions, Curry applauded a move announced by the Federal Deposit Insurance Corp. on Wednesday aimed at encouraging new bank charters by reducing the probationary period for de novo banks from seven years to three.

Curry said the decision was "entirely consistent with our view that if there is a need, appropriate capital and … established management you should see the granting of a national bank charter."

Answering another question, Curry also touched on the Community Reinvestment Act and said that, while the establishment and closing of branches is not part of regulators' normal oversight, CRA has a role to play in this. He expects banks to take a "hard look at their branch networks," but said they have to keep low- and moderate-income neighborhoods in mind.

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