WASHINGTON—Federal Reserve Gov. Lael Brainard has offered her perspective on how fintech might change the way the financial industry meets the needs of underserved consumers and improve financial inclusion. Brainard said she is "cautiously optimistic” about the prospects.
"It is too early to tell if many of these innovations will ultimately make good on their promise to help underserved consumers navigate their complex financial lives," Brainard said this week at an event hosted by the Federal Reserve Bank of Boston and the Aspen Institute Financial Security Program.
Brainard also warned against the lack of consumer protections when using "free" services.
"It is still very early, and many of these products have difficult issues to work through with respect to consumer data security and privacy, which may have important implications for pricing of services. Again and again, we are reminded that when products are free, the consumers themselves may be the product," she said.
‘Level Playing Field’
In its follow up analysis, NAFCU noted that fintech can produce real benefits to consumers, including increased speed, convenience and new product offerings that make it easier for them to manage their financial lives.
“However, the association has urged lawmakers and regulators to ensure a level playing field between fintech companies and financial institutions, from data security to consumer protection,” the trade association stated.
A March NAFCU Economic & CU Monitor report found credit unions are seeking opportunities to partner with fintech companies to provide members with new technology and solutions to manage finances, though some smaller credit unions have difficulty obtaining such services which could impact serving underserved communities.