The US Office of the Comptroller of the Currency (OCC) has announced the inaugural head of its newly created Office of Financial Technology.
The OCC – an independent bureau of the US Department of the Treasury – charters, regulates and supervises national banks and federal savings associations, as well as federal branches and agencies of foreign banks.
The Washington DC-headquartered authority announced in late-October last year that it establishing the Office of Financial Technology in early 2023 ‘to bolster the agency’s expertise and ability to adapt to a rapidly changing banking landscape’.
Five months on it has announced that Prashant Bhardwaj has been recruited to lead the fintech office as deputy comptroller and chief financial technology officer, leading a team responsible for ‘analysis, evaluation and discussion of relevant trends in financial technology, emerging and potential risks, and the potential implications for OCC supervision’.
Bhardwaj’s appointment takes effect from this week. He joins after almost 30 years’ experience in roles across the financial sector and reports to the OCC’s senior deputy comptroller for bank supervision policy, Grovetta Gardineer.
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Increased focus on digital money
The Office of Financial Technology, whose webpage also names OCC chief innovation officer Beth Knickerbocker alongside Bhardwaj as part of a two-strong leadership team, has been created to ‘build on and incorporate’ the Office of Innovation. The OCC established the Office of Innovation seven years ago.
When the creation of the Office of Financial Technology was announced last year, acting comptroller of the currency Michael J Hsu described fintech as “changing rapidly” and that that bank-fintech partnerships were “likely to continue growing in number and complexity”.
“To ensure that the federal banking system is safe, sound and fair today and well into the future, we need to have a deep understanding of financial technology and the financial technology landscape. The establishment of this office will enable us to be more agile and to promote responsible innovation, consistent with our mission,” Hsu, who has been acting comptroller of the currency for almost 12 months, said at the time.
The announcement of Bhardwaj’s appointment states that the new Office of Financial Technology ‘will enhance the OCC’s expertise on matters regarding digital assets, fintech partnerships and other changing technologies and business models within and that affect OCC-supervised banks.’
The OCC’s overall mandate has evolved significantly since being established by the National Currency Act of 1863. The Federal Reserve Act of 1913 established the Federal Reserve System to issue currency, with the OCC focusing on bank scrutiny and regulation (the OCC continued to retain ‘currency’ in its name). More recently the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) of 2010 reassigned much of the OCC’s former compliance mandate to the newly created Consumer Financial Protection Bureau (CFPB), as well as establishing the Financial Stability Oversight Council (on which the comptroller of the currency sits).
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OCC on trend
The OCC’s creation of the Office of Financial Technology follows moves by other financial authorities and regulators to devote increased focus and resource to fintech-related developments.
For example, the Securities and Exchange Commission (SEC) announced more than two years ago that its Strategic Hub for Innovation and Financial Technology, commonly known as FinHub, was to become a standalone office.
Other financial regulatory agencies in the US include the Federal Deposit Insurance Corporation (FDIC), where the comptroller serves as a director. The FDIC last year appointed Brian Whittaker as chief innovation officer. He had been acting in the position after the resignation in February of inaugural postholder Sultan Meghji after just a year.
The Federal Reserve System appointed Sunayna Tuteja as its first chief innovation officer more than two years ago. She recently described the cultural challenge of encouraging cautious central bankers to embrace innovation – and how leaders can try to “reduce anxiety” about new technologies.
*** The White House last month published the 513-page Economic Report of the President (an annual report produced by the Council of Economic Advisers), which featured a chapter on digital assets. The 30-page chapter (‘Chapter 8: Digital Assets: Relearning Economic Principles’) mainly examines crypto assets, ‘whose proponents have been relearning the lessons from previous financial crises the hard way’, the text notes, concluding that crypto assets ‘currently do not offer widespread economic benefits’ and are ‘largely speculative investment vehicles’.
US regulator OCC ups fintech focus with dedicated office – our news story (1 November 2022) on the plans to establish the Office of Financial Technology
US consumer agency aims to ‘finalise’ open banking rules in 2024 – our news story (31 October 2022) on a speech by Consumer Financial Protection Bureau director Rohit Chopra setting out the government agency’s strategy for open banking regulation
White House publishes ‘comprehensive framework’ for digital assets – our news story (21 September 2022) following up the executive order (see below)
White House sets out cross-government digital assets strategy – our news story (11 March 2022) on an executive order that stated that digital assets’ growth ‘creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security and climate risk’
US DoJ appoints digital assets prosecutor to head crypto crimes team – our news story (28 February 2022) on the appointment of Eun Young Choi as inaugural director of the Department of Justice’s newly created National Cryptocurrency Enforcement Team (NCET) to spearhead an intensification of efforts to tackle digital asset crimes
US SEC’s fintech unit to become standalone office – our news story (4 December 2020) on the Securities and Exchange Commission (SEC) designating its Strategic Hub for Innovation and Financial Technology, commonly known as FinHub, as a standalone office