WASHINGTON—Members of the House Financial Services Committee Task Force on Financial Technology are being urged to "ensure that when fintechs compete with financial institutions, they do so on a level playing field where smart regulations and consumer protections apply to all actors."
The request was made by NAFCU’s Max Virkus, associate director of legislative affairs, ahead of an HFSC hearing examining the use of alternative data in relation to credit scores.
"As we have learned from the many recent data breaches, fintech companies that specialize in lending, payments, or data aggregation are a target for hackers and present data protection concerns," wrote Virkus in a letter to the committee. "While depository institutions have for decades complied with a national standard on data security since the passage of the Gramm-Leach-Bliley Act, other entities who handle consumer financial data do not have such a national standard and oversight."
Need for Strong ‘Ecosystem’
Virkus also shared NAFCU's support of innovation in the marketplace "while still maintaining an inclusive, safe, and strong financial ecosystem," – including the use of alternative models that acknowledge creditworthy borrowers and can allow more consumers access to credit.
"By nature of credit unions unique relationship with their members, credit unions have no incentive to exclude members from access to products and services, and regulators should permit institutions to continue to use these relationship-based alternative data sources in their lending decisions," Virkus said.
‘Level Playing Field’
The association said it acknowledges 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, NAFCU remains committed to ensuring a level playing field for credit unions and continuously monitors the financial services landscape for potential changes that could impact the industry,” the trade association said.