WASHINGTON—The Treasury Department has released a report assessing the impact of fintechs in the financial services space that also offers some specific recommendations for action.
The Treasury’s report found nonbank firms are adding complexity and competition in core consumer finance markets, such as mortgage lending and managing finances. In addition, while fintechs’ participation may improve the delivery of some financial services, they also pose new risks to consumers and the financial system, specifically risks related to reliability and fraud, according to Treasury.
To address concerns, Treasury is recommending federal banking regulators and the CFPB use their authorities to maintain a level playing field, promote competition and responsible innovation, and protect consumers and market integrity.
Specific Recommendations
Some of the report’s specific recommendations include:
- Ensuring that credit underwriting practices of all lenders are designed to increase credit visibility, reduce bias, and prudently expand credit to consumers
- Implementing a clear and consistently applied supervisory framework for an insured depository institution’s role in bank-fintech relationships to address competition, consumer protection, and safety and soundness concerns
- Increasing consistency in supervisory practices related to small-dollar lending programs
- Taking steps to help promote a more unified approach to oversight of consumer-authorized data sharing