OCC's Hsu: Bank-fintech partnerships 'here to stay,' while crypto hogging 'brain space'

tech.hindustantimes.com:

A leading U.S. bank regulator said his caution over banks partnering with fintechs is not meant to stifle those arrangements, but rather reflects his concern that firms must adequately gauge their risks.

Michael Hsu, the acting Comptroller of the Currency, also told Reuters in an interview that policymakers may be devoting too much time and energy to thinking about cryptocurrency, at the expense of figuring out the best way to police other types of financial technology.

"Look, bank-fintech partnerships, they're here to stay. I'm not trying to do away with them," Hsu said on Wednesday. "This is the future, so let's do the future right."

In remarks last month that raised eyebrows across the financial services industry, Hsu said that the Office of the Comptroller of the Currency had observed partnerships between banks and fintechs growing at “exponential rates,” and which were increasingly becoming more complex.

“My strong sense is that this process, if left to its own devices, is likely to accelerate and expand until there is a severe problem or even a crisis,” Hsu said at the time.

House Republicans criticized Hsu's comments in a letter sent to the OCC head on Tuesday, contending that the technological innovation enabled by bank-fintech partnerships has allowed banks to reach underserved customers.

Hsu explained on Wednesday that his concern over banks and fintechs joining forces is the possibility that responsibilities for monitoring risk can become muddied when multiple firms, sometimes with different incentives, share responsibilities.

"When everything is done within a bank, we know exactly who is accountable when things break," he said. “When you start chopping these things up ... and the business models are different,