ARLINGTON, Va.—The Federal Financial Institutions Examination Council (FFIEC) is being urged by NAFCU in a new white paper to consider enacting regulations to create what the trade group said would be a level playing field between fintech companies and traditional financial institutions.
"In the paper, NAFCU advocates for regulator coordination with Congress to ensure that credit unions and fintech companies compete on a level playing field where collaboration is valued and consumers are appropriately protected,” said NAFCU President Dan Berger.
He shared the whitepaper directly with NCUA Board Chair Rodney Hood and Members Todd Harper and Mark McWatters, CFPB Director Kathy Kraninger, Federal Reserve Chair Jerome Powell, and Treasury Secretary Steven Mnuchin.
NAFCU said it developed its whitepaper to chart a path towards regulatory coordination between traditional financial institutions and fintech companies.
The white paper includes an overview of political and regulatory efforts related to fintech. The House Financial Services Committee has financial innovation as part of its fall priorities, and the CFPB has recently taken steps to "encourage regulatory innovation" and promote innovation and facilitate compliance at financial institutions.
The Recommendations
With its white paper, NAFCU recommended the FFIEC – which is comprised of five banking regulators, including the NCUA and CFPB, and state regulator representatives – form a subcommittee on emerging technology to monitor risks posed by fintech companies and develop a joint approach for facilitating innovation. The subcommittee should:
- Annually report to Congress its findings, including a determination of whether regulatory reforms are necessary to mitigate supervisory gaps resulting from fintech business models or entirely new applications of technology
- Define the parameters of responsible innovation to ensure consistent examination of emerging technologies. In doing so, the subcommittee should distinguish traditional banking activities from non-traditional activities
- Identify best practices for responsible innovation that reflect the constraints of different industry segments within the financial sector
- Formally recommend to Congress ways to improve financial laws to allow FFIEC regulated institutions to adopt new technologies more easily and with greater legal certainty