Independent Banker - April 2019 - 41

Next: How ICBA is working to close the ILC loophole
decision provides parity with options already
available to these companies at the state level.
Rest assured, the OCC will supervise these
new banks like other similarly situated national
banks. We have been clear that a national bank
charter has tremendous value, and it comes with
responsibilities and obligations. I think that
came as a shock to some fintechs. When the conversation
began a couple of years ago, there may
have been 250 fintechs lined up. As they came
to understand what it means to be a bank, many
have considered other ways of partnering with
banks and providing their services. There will
still be some whose business models are a good
fit for a national bank charter. The point is to
provide additional choice, and allow the federal
banking system to adapt to the changing needs
of the market and its customers, just as it has for
156 years.
associations in 2019.
But it is not all about costs. The changes we
are making allow us to be more responsive to the
risks and needs of the industry. One of my goals
was to empower employees, particularly examiners
in the field, to act on their expert judgment
and on-the-ground insight. You can see the
results in the number of decisions that require
my signature. Two years ago, more than 90 percent
of agency decisions went all the way to the
front office. Today, fewer than half need my signature.
That means quicker decision-making
and more efficient supervision. Everyone benefits
from that.
Q:
A:
How is the OCC's new Office of Innovation
helping community banks
with the challenges of innovation?
The Office of Innovation supports
community banks by serving as a clearinghouse
for information on regulatory policy,
the supervisory process and expectations. It
shares success stories, lessons learned and
information that banks should consider when
evaluating new products and services. Community
bankers have direct access to OCC experts
on a variety of matters related to innovation,
new products and services, and emerging trends,
during banker visits or during Office Hours and
Listening Sessions.
Q:
A:
What initiatives are you pursuing to
ensure the OCC operates as effectively
and efficiently as possible? How will
any changes benefit community banks?
The OCC takes its responsibility to be a
good steward of its resources seriously.
In 2018, we cut costs by nearly $100 million
from what we originally planned. We did that
through optimizing our real estate, finding savings
in contracted services and operating more
efficiently overall. We continued that discipline
in 2019 by reducing our budget again.
As a result, we reduced the assessments
we charge national banks and federal savings
Learn about
the OCC's
Office of
Innovation,
including
upcoming
Office
Hours and
Listening
Sessions, at
bit.ly/occ
innovation
Q:
A:
What challenges do you see for
banking in the next year?
It is important that bankers remain vigilant
regarding the risks accumulating
within their portfolios and businesses. The latest
Semiannual Risk Perspective from the OCC
describes the greatest risks facing the federal
banking system.
Credit quality remains strong for now, but the
OCC and bankers should monitor the quality of
new loans, the potential for lender complacency
and embedded risks from eased underwriting.
Bankers must also manage risks associated
with rising rates that have the potential to erode
the value of long-term fixed-rate assets and
increased cost of deposits because of competitive
pressure.
We also have concerns about operational and
compliance risks related to the increasing speed
and sophistication of cyber threats and concentration
in third-party services, as well as banks'
ability to manage money-laundering risks and
adapt successfully to amended consumer protection
requirements.
Another item on the radar involves the increasing
volume of credit handled by nonbanks. Banks
need to understand how risks developing outside
the banking system affect them. The industry
needs to understand where they are taking credit
risk and whether they have the necessary controls
for such risk.
Everyone also needs to be aware that by the
time you see overheating, you may have already
exceeded your intended risk tolerance. The
machine often stops suddenly.
independentbanker.org Q 41
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Independent Banker - April 2019

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