As fintech continues to grow and mature and the OCC takes steps toward launching a fintech bank charter, the Federal Reserve has formed a cross-cutting fintech working group on the topic, Fed Governor Lael Brainard said in a speech today. The group incorporates personnel from supervision, community development, financial stability, payments and other areas at the Fed Board of Governors and the regional Federal Reserve Banks.
“As policymakers, we want to facilitate innovation where it has the potential to yield broad social benefit, while ensuring that risks are thoroughly managed,” Brainard said. “We should be attentive to the potential social benefits of these new technologies, prepared to make the necessary regulatory adjustments if their safety and integrity are proven and their potential benefits found to be in the public interest, and vigilant to ensure risks are well understood and managed.”
While she highlighted several benefits from the growth of fintech, she also raised certain concerns that she said the Fed will continue to monitor, such as the use of non-traditional underwriting and pricing data in lending and access to consumer data, an issue currently being studied by the Consumer Financial Protection Bureau. “Fintech innovations that rely on data sharing may create security, privacy, and data-ownership risks, even as they provide increased convenience to consumers,” she said.