Words like “disruption” and “democratization” are flung around casually by many tech entrepreneurs and venture capitalists in the mistaken belief that these are noble causes in and of themselves. In the world of tech startups seeking to reinvent our financial lives, disruption and democratization are high ideals only to the degree that they address antiquated or broken systems and lead to products and services that actually improve things for greater financial inclusion.

Netflix is a good example of disruption that actually made a difference. In its early days renting DVDs online, the company’s mission was described by many as democratizing movie distribution – finding audiences for lower-budget, independent films struggling for visibility and viability. It was certainly a disruptive idea. Netflix’s algorithm could identify subscribers with an interest in, say, socially-conscious documentaries and recommend those films. This was inarguably good for documentary filmmakers, but it was great for Netflix customers – helping the company deliver on its real mission of creating targeted content and connecting people with the movies they’d love.

Recently, important yet measured steps were taken to encourage and foster innovation in financial services. The U.S. Treasury Department released a long-awaited “fintech” report, and the Office of the Comptroller of the Currency (“OCC”) issue guidance on a limited special purpose national bank charter.

A national charter will enable online lenders, payment apps and other web-based financial services to become nationally regulated. They are currently being subjected to uneven patchwork of state laws. For larger companies doing business across the country, state law compliance is difficult and costly, but for smaller businesses, it is financially impractical.

The idea of a national fintech charter was originally proposed by then-Comptroller of the Currency Thomas J. Curry, who summed up his thinking in a closely watched speech at Georgetown University Law Center in December 2016.

“It is clear that fintech companies hold great potential to expand financial inclusion, empower consumers, and help families and businesses take more control of their financial matters,” the Comptroller said.

The Treasury Department has also signaled its agreement, adding that a special purpose national bank charter from the OCC “may provide more efficient, and at least more standardized, regulatory regime than the current state-based regime in which they operate.”

Many of these businesses are disrupting and democratizing banking services, and some traditional banks are none too happy about it. But the fact is that fintech companies are addressing the inadequacies of the traditional banking ecosystem which has failed to keep pace with the aspirations of today’s consumer and small business owner.

There are three principal reasons why a new fintech charter would make for wise fiscal policy:

First, it would give innovative businesses a choice. Currently, non-bank lenders can obtain individual state lending licenses (State Model) or partner with a Bank (Bank Partnership Model). This proposal will make charter applications another choice for innovators, not a requirement. The State Model requires compliance with the myriad of laws rules and regulations of various states. The Bank Partnership Model encompasses the trust, security, and peace of mind usually associated with the legacy banking industry and combines it with cutting-edge technology to create better and more user-friendly services and solutions. Companies applying for an OCC fintech charter will be evaluated to determine whether they have a sound business plan with a strong emphasis on financial inclusion, a clear path to profitability, appropriate risk management and consumer protection practices, and are well capitalized with ample liquidity. Potential applicants would also need to weigh the cost of national regulatory compliance vs. dealing with state regulators individually vs. streamlined compliance of the Bank Partnership Model. As former Comptroller Curry wrote this week in an op-ed, a dual fintech system “creates healthy regulatory competition that promotes excellence in regulation and benefits all stakeholders and the public.”

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