Fintech Banks Look to State Charters

When the Office of the Comptroller of the Currency announced a couple of years ago it would begin to offer national bank charters to fintechs, some thought this would herald in a new age — one in which the U.S. would see an explosion of digital-only “challenger banks” such as have become popular in Europe and the U.K. 

However, since that time, the OCC’s fintech charter has become bogged down and mired in various legal battles that challenged its validity. In the wake of this confusion and the bureaucratic red tape associated with a national charter, some fintechs are looking to start small and seek a state charter in certain states, American Banker reports.

While not as appealing as a national charter — as fintechs could only do business as full-fledged banks in the particular states where they are chartered — it is nonetheless proving to be an attractive alternative for some until the national charter process is ironed out.