Start-up companies that are focusing to enter into the banking business have to opt for a traditional route. A bank charter has been welcomed by Fintech companies which helped them to turn into a bank at fast rate. The dealing took a blow recently as New York’s federal court took a decision that issuance of charters, office of Comptroller’s Currency aren’t authorized to make such decision.
The ruling further pin-points’ tech companies’ murky nature when they get in to the business of banking. This also states that now finance start-ups have to follow similar procedure to get established as a firm like everyone else. While speaking to the press Lindsay Davis stated that the present ruling will create hurdle for fintech which are planning to turn into banks.
She also stated that fintechcharter provides help in streamlining process which provides aid to a company so that it can get inside the market. Fintech charter seems to expedite whole process since it is allowing start-up for offering payments and lending and they do not have to comply with every other state’s banking regulation and do not have to accept the FDIC insurance.
One of the spokesperson of the agency stated that it completely disagrees with court’s interpretation as well as decision, and is planning to make an appeal for ruling. As per Deloitte without getting special exception, start-ups will have to wait for 18 to 24 months to get a charter for national bank. While talking to the press Alaina Sparks stated that the process might even be longer than what had been anticipated by fintechs. Moreover, they are also cumbersome and lengthy.
She further stated that with the OCC charter companies are planning to seek another option. Advocates of fintech charter stated that market would have got intense competition if new entrants were allowed to establish as banks but state regulators had blocked the pathway of fintech as they do not want them to enter into the business.