Job moves from traditional finance to fintech happen all the time. Moves from fintechs to the old world are not so common.
Enter Brian Brooks, the erstwhile chief legal officer at cryptocurrency firm Coinbase. Mr Brooks is now acting head of the US’s Office of the Comptroller of the Currency, which regulates the country’s banks at federal level.
Mr Brooks has been at the regulator since April, when he joined as first deputy comptroller and chief operating officer. He ascended to the top job at the end of May after Joseph Otting quit halfway through his term.
Extending the OCC’s reach to fintech regulation has been high on his agenda. He intends to unveil a national payments charter as soon as the autumn.
“Payments is the one aspect of banking that is inherently borderless . . . so it’s sort of hard to understand why there’s not a federal charter for payments firms,” Mr Brooks told #fintechFT. “The idea that these giant global payment companies are regulated with state licences, is to me very puzzling.”
The payments charters would authorise banks to carry out money transmission activities across the US, replacing the patchwork of state payments licences that companies need to get to operate nationwide, to create a more efficient and consistent system.
The OCC has been down this road before, having spent almost four years trying to instigate a national charter for a broader group of fintechs. That bid has met fierce resistance from New York’s Department of Financial Services (DFS), which argued that the OCC was overstepping its mandate.
Mr Brooks insists that the fintech charter project is not dead. The OCC is “of course” not going to offer fintech charters in New York, where it is appealing a court decision in favour of the DFS’s bid to block the charters from being issued.
The possibilities for the rest of the country remain very much alive. Mr Brooks has spent time on America’s west coast “talking to probably 30 fintechs, many of them household names . . . many of whom are quite interested in applying for those charters. I think we already have eight or 10 meetings with companies who want to come talk to us.”
The OCC hopes to begin engaging with them on those charters for which they can begin applying immediately. If fintechs demonstrate the enthusiasm that Mr Brooks expects, he argues it will be a boost to the sector overall.
“There’s a level of customer confidence in dealing with a company that is a bank that is supervised by the OCC,” he says. “And I think one of the reasons that fintech has taken off but hasn’t been faster, is because there are still people . . . who feel uncomfortable dealing with some of these companies because they don’t know who’s looking over them.”
Blockchain — the once-hyped technology that allows records to be created and stored on a mutually-accessible unchangeable ledger — is another fintech topic on which Mr Brooks has strong views.
“I think the epitaph has been completely wrongly written,” he says of the technology which was once a buzzword for the future of finance and is now mentioned less and less. “I think there’s a lot of energy there, and real promise, it’s just not what people thought it was, it’s not a software that you could buy and plug in your bank and so that’s something very different.”
Quick Fire Q&A
Company name: Wagestream
When founded: 2018
Where based: London
CEO: Peter Briffett
What do you sell, and who do you sell it to: Wagestream works with employers globally to allow employees to track, access and save their earnings, in real time.
How did you get started: We wanted to stop people getting stung by unplanned expenses, forcing them into debt between pay cycles.
Amount of money raised so far: £65m
Major shareholders: QED Investors, Northzone, Balderton Capital, Latitude Ventures, Fair By Design (Joseph Rowntree, Barrow Cadbury Trust & Social Tech Trust), Village Global.
There are lots of fintechs out there — what makes you so special: We are the only company to combine workplace and personal finance data to create a new breed of financial products.
Further fintech fascination
Follow the money: Ant Group, the payments arm of Alibaba, is lining up an IPO, reports the Financial Times. The company, which has been valued at $150bn and has 900m users, will have a dual listing in Shanghai and Hong Kong. Ant has not yet indicated how much it wants to raise or given a timetable for the listing.
Wirecard fallout: The global Wirecard scandal has continued to make waves. The Financial Times reports that the EU’s financial regulator has launched an investigation into Germany’s supervision of Wirecard. Also EY, Wirecard’s auditor, warned the company that a special investigation by KPMG could lead to wrong conclusions about the business. And there is an interview with Leo Perry, a fund manager who has spent years investigating the company. For full coverage, go to ft.com/wirecard
Trendwatch: Banks are embracing cloud computing like never before, argues Patrick Jenkins in the Financial Times. Spurred on by the coronavirus crisis, banks have been signing up to outsource data storage and other services. In the past regulatory concerns have held back the adoption of cloud-based technology by big banks, but the picture is slowly changing.
Trendwatch (2): Lots of digital banks are aiming to monetise their offerings by charging for premium services but, as Sifted reports, many of them have had a tough time making this approach work, especially in the UK. Monzo is the latest one to give it a try.
AOB: Moneybox, a savings and investment app, has raised £30m in a series C funding round, reports Finextra; Direct Line has bought insurtech Brolly, which specialises in contents insurance, says Sifted; Coverly, an insurtech specialising in SMEs which was launched last year, is closing down, reports Insurance Age.
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