Controller: Bank-FinTech Tie-ups Must Eye Risk

After his earlier comments about partnerships between banks and FinTechs led members of the financial services industry and House Republicans to worry that he would discourage innovation, Acting Comptroller of the Currency Michael J. Hsu has reportedly explained that he wants to ensure firms are monitoring their risks.

When several firms work together, it can be more difficult to monitor risk and to assign responsibility when there is a problem, the head of the office of the Comptroller of the Currency (OCC) said on a Wednesday (October 12) interview with Reuters that was published on Thursday (October 13).

“Look, bank-FinTech partnerships, they’re here to stay,” Hsu said in the report. “I’m not trying to do away with them. This is the future, so let’s get the future right.”

As reported on September 7 when Hsu spoke at the Clearing House and Bank Policy Institute’s annual conference in New York, Hsu said that the increased prominence of digital banking and FinTechs could lead to a serious financial crisis.

Read more: US comptroller says FinTechs, Big Tech require more attention

He said the emergence of FinTech companies into the traditional financial sector, including through partnerships with banks, had led to more complexity and “de-integration” in the banking sector.

“My strong feeling is that this process, left to its own devices, is likely to accelerate and expand until it is a serious problem, or even a crisis,” Hsu said at the conference, as reported at the time by Reuters.

In Wednesday’s interview with Reuters, Hsu also said policymakers may spend less time looking at certain types of financial technology because they are giving so much of their attention to cryptocurrency.

“We spend too much time on crypto,” Hsu said in the report. “It’s interesting, it has difficult issues … but relative to other tech and banking issues, I think we’re now kind of overweight crypto.”

PYMNTS has contacted the OCC for comment.

New PYMNTS study: How consumers use digital banks

A PYMNTS survey of 2,124 US consumers shows that while two-thirds of consumers have used FinTechs for some aspect of banking, only 9.3% call them their primary bank.