The Office of the Comptroller of the Currency (OCC) invited fintech companies to apply for their own national charter on July 31, which could lead to operational benefits for powersports finance companies, Donal Hummer Jr., president and chief executive of ThunderRoad Financial, told Powersports Finance.
“It’s really interesting because it was almost tailor written for powersports finance,” Hummer said. “It would enable non-bank companies to offer financing, which is something they [cannot] currently do with the bank charters that were available prior to July 31.”
At the time of writing, no company has yet applied for a fintech charter, and ThunderRoad is studying what the fintech charter could further mean for powersports.
However, the invitation for fintechs to apply for national charters is a means to spur innovation. It would potentially allow online lenders, payments firms, and certain cryptocurrency companies to operate without relying on a bank. In a sense, they become banks themselves and though regulatory, and consumer groups have spoken out against about the fintech charter, this could pave the way for innovative partnerships in powersports lending.
“Since you would be a regulated financial institution, there are certain exemptions that you can take advantage of throughout state law, so licensing issues become much simpler,” Hummer said. “From the standpoint of a powersports finance company, it would greatly simplify everything that it did on a nationwide basis and standardize what it was doing for all of its dealers.”
Currently, fintechs are regulated by various state and federal agencies just like any financial institution. However, the OCC indicated that applicants will initially face heightened supervision and will be treated akin to “similarly situated national banks, to include capital, liquidity and financial inclusion commitments as appropriate.”
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