On Tuesday, Beth Knickerbocker, the chief innovation officer for the Office of the Comptroller of the Currency (OCC), delivered testimony to the House of Representatives’ Task Force on Financial Technology. In her report, she discussed innovation framework, partnerships, fintech bank charters and the upcoming launch of an Innovation Pilot Program.

The Innovation Pilot Program would help banks better understand regulatory hurdles when creating new products, and lawmakers would learn about innovative technologies. The report doesn’t mention when the program is expected to launch, but the program overview outlines the minimum duration a pilot would last is three months and the maximum duration is two years. Banks, their subsidiaries and federal agencies all could participate, and Knickerbocker said this could stop regulators from impeding on responsible innovation.

“Regulatory tools that the OCC may use during a pilot to communicate with a bank would include interpretive letters, supervisory feedback and technical assistance from OCC subject matter experts—but would not include statutory or regulatory waivers,” Knickerbocker said. “The OCC would expect banks to include specific controls and safeguards to address risks to consumers and would not permit proposals that have potentially predatory, unfair or deceptive features into the Program.”

The OCC has received 18 comments on the program since conceiving of the idea in April. The American Bankers Association, the National Consumer Law Center, the Bank Policy Institute and the MIT Sloan Club of DC all left comments. 

Rob Morgan, the vice president of emerging technologies at the American Bankers Association, wrote that the program could foster responsible innovation, but the program proposal needs clarifications. According to Morgan, the OCC should stress that the program is voluntary.

“If banks feel compelled to use this process for every innovative product they introduce, this program has the potential to slow the process and stifle the very innovation it is seeking to promote,” Morgan said. “We would urge the OCC to continue to emphasize the voluntary nature of the program to banks and examiners.” 

Additionally, in her report to Congress, Knickerbocker mentioned that two financial technology companies have applied for a traditional bank charter. Robinhood and Varo have both done so, although they are not cited by name. She added that no banks have applied for a special purpose banking charter. Meanwhile, she disclosed that the New York Department of Financial Services is suing the U.S. Treasury Department to prevent fintech companies from receiving special purpose bank charters.