The Office of the Comptroller of the Currency wants to use new data sources to determine creditworthiness and give underbanked consumers a leg up into the financial system.

“The purpose of the credit score, which is predicting your likelihood of paying in the future, is not unique to having paid credit obligations in the past,” said Brian Brooks, acting comptroller of the currency, during a fireside chat with Berkeley Research Group on Friday. “Why haven’t we built scores that are predictive, based on things that everyone does?”

Twenty-two percent of Americans are unbanked or underbanked, according to the Federal Reserve, and the ability of those consumers to access financial products is blocked by structural barriers. Underbanked consumers are often trapped in a self-defeating loop, prevented from getting credit because they’ve never had credit. Brooks said that credit agencies should use data from payments like utilities and rent to determine creditworthiness. 

Brooks also mentioned common payments, like Netflix subscriptions, as a potential measurement of creditworthiness. As for reaching underbanked consumers, mobile banking is the future as banks cut branches in underserved communities, Brooks said. 

Using new data sources to go beyond FICO to reach more consumers is a growing trend in financial services. CredoLab’s technology, for example, analyzes smartphone data to help banks underwrite a new swathe of customers, while Nova Credit translates foreign credit scores to the U.S. on behalf of newcomers. Startups like LendUp and Aura offer credit-building personal loans and also reach consumers overlooked by FICO.  

The OCC is involved in many initiatives around financial technology. During the fireside chat, Brooks also touched on the OCC’s proposed charters for fintechs and payments companies. Although he acknowledged the charters are controversial, he said much of the pushback stems from banks trying to protect their incumbent status and state regulators who are unwilling to compete with federal regulators for charters.

“The job of the OCC is not to protect incumbents,” Brooks said. “It’s to protect the sanctity of the bank charter and the safety and soundness of the system.”

Brooks said banks could benefit from additional OCC oversight on fintech companies, noting that many fintechs are actually bank vendors. OCC regulation of these fintechs could shorten vendor onboarding times, which average between 18 to 24 months, according to Brooks.  

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The OCC’s proposed fintech charter faces a length court battle after being blocked by the Southern District of New York last year. The OCC is also pushing for a special purpose payments charter, which is likely to hit the same legal roadblocks. Regardless of the court battle ahead, experts seem to think the current state-by-state regulatory system that fintechs must satisfy is outdated.

“The fintechs are here to stay. I think there has to be a more streamlined way to regulate them. I just don’t think the current situation is useful, and I don’t think people will tolerate it long-term,” Julie Hill, professor of law at the University of Alabama and regulation expert, previously told Bank Innovation. “If we look down the road in 10 years, we don’t see this fragmented system of regulation that we have now, because it’s really not good for anyone.”

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