The chief U.S. bank overseer on Wednesday called on the financial services industry to provide better ways to serve customers online or risk losing business.
Comptroller of the Currency Joseph Otting said that banks have to offer customers easier access to lending and other critical services through mobile applications and websites to prevent losing ground to financial technology companies.
“The old ways of doing a lot of things are evolving, and I think that the financial services industry has to evolve as well,” said Otting, who was confirmed Nov. 16, in his first briefing with reporters.
Financial technology companies, often called “fintechs,” have exploded in popularity as smartphones proliferated throughout the U.S. Such companies offer loans, money transfers and payments using mobile apps or websites.
Some fintechs have risen to prominence by offering loans at a lower interest rate to customers who might be unable to borrow from traditional banks. Those customers could live in areas with few brick-and-mortar banks or have troubled credit histories. Other customers could be seeking small loans for shorter timeframes.
Otting attributed the rise of fintechs to regulators forcing traditional banks out of the market for small loans, but said banks needed to step up their efforts to reach underserved customers online.
Even so, Otting said that fintech could play a limited role in the broader financial services industry with proper federal oversight.
“I’m not sure what it looks like and how it’s funded, but I think there’s a space there that fintech could solve,” Otting said.
Otting’s predecessor, Thomas Curry, laid out the principles of a banking charter for fintechs that would allow companies to operate nationally without facing regulatory roadblocks in each state it pursues. Otting said he was open to the idea.
Otting also called the rapid rise in value of bitcoin and other digital currencies a “phenomenon” that had limited implications for banks as of now.
Otting said bitcoin “doesn’t seem to be coming into the banking system,” and wouldn’t affect its “safety and soundness” for the foreseeable future. He compared digital currencies to his trading of “baseball cards for marbles” as a kid, noting that none of the currencies are considered legal tender.
Bitcoin and other cryptocurrencies rallied to all-time highs last week, and lawmakers and regulators are scrambling to understand the technology behind them and their implications on financial markets.
Outgoing Federal Reserve Chair Janet Yellen called bitcoin “a highly speculative asset” with no inherent value and limited use.
After bitcoin hit an all-time high of over $17,000 this past week, Securities and Exchange Commission chief Jay Clayton also warned investors of "fortunes" from the rapid rise in the value of digital currencies.