Progress in financial services is inevitable because clients expect and demand it and emerging technologies enable it. The question is not if there will be improvements in the delivery of financial services. The question is who will be leading; who will be following; and who will be rendered irrelevant. I see most banks holding to tried and true principles and allowing FinTech to experiment until they are ready to be taken seriously. Seems to me that the best sequence is for regulated banks to adopt new technology after it has passed into the more productive phases of the hype cycle... https://www.gartner.com/smarterwithgartner/top-trends-in-the-gartner-hype-cycle-for-emerging-technologies-2017/
The regulatory environment is not conducive for the firms, regulators, or society to embrace until the offerings reach some sort of stable base past that first hype wave. To be subjected to regulations means that the expectations and aspirations have matured to a point of mutual understanding. That is not where most FinTechs operate. Research and development is incompatible with regulations. If a FinTech is in R&D, I see no justification for regulation. If they are in stable production mode, it seems to me that they could fall under traditional regulatory supervision.
My two cents.
Neil
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Neil Stanley
President of Community Banking
TS Banking Group
Treynor, Iowa
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Original Message:
Sent: 09-07-2018 09:33
From: Steve Kinner
Subject: The Treasury Fintech Report and the OCC Fintech Announcement: What They Mean for Banks and Fintechs
Just finished reading the Treasury Fintech Report and the OCC Fintech Announcement: What They Mean for Banks and Fintechs published by Wolters Kluwer and promoted by the ICBA. The meat of the report, which runs approximately 7 pages, summarizes Wolters Kluwer's take on the Treasury's 223-page report on Nonbank Financial, Fintech, and Innovation and the OCC's announcement allowing fintechs to apply for special-purpose national bank charters.
Here are some highlights from the recommendations found in the Treasury Fintech Report:
- The U.S. Treasury Dept. recommends steps to reduce, modernize and update regulations to facilitate innovation by both banks and fintechs.
- Legislation should be enacted to facilitate standardized digital notarizations, and other steps should be taken to support lenders adopting end-to-end digital mortgage loans.
- Legislation should be enacted to modernize debt collections through the codification of rules directing reasonable digital communications that reflect consumers' preferred methods of contact/communication.
- Treasury recommends not implementing the Consumer Financial Protection Bureau (CFPB, now renamed the BCFP) payday lending rule such that individual states would continue to regulate short-term, small dollar lenders.
- IRS and other government technology updates are recommended, but the related budget issues are acknowledged.
Wolters Kluwer's conclusion states that, "given the OCC Fintech Announcement, a fintech firm should assess whether a special purpose national bank charter is in its best interest and consistent with its business objectives, and whether it can meet the requisite corporate governance, risk management, compliance, capital and liquidity, and contingency planning standards, both as part of the application process and on an ongoing basis." Read specifics here.
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Steve Kinner
Promontory Interfinancial Network
Arlington VA
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