As bank regulators consider internationally coordinated activity to address challenges posed by fintech, the American Bankers Association said yesterday that a global regulatory framework is not well-suited to oversee fintech beyond the areas where robust coordination already exists, such as cybersecurity, payments and illicit finance.
“Banking agencies around the world are responsible for the oversight of banks and do not have the authority to provide direct oversight to the non-bank fintech providers,” ABA said in comments to the Basel Committee on Banking Supervision. “Any international framework would do little to bring nonbank fintech providers under consistent regulation.”
ABA emphasized that technological innovation has always been part of banking and thus under regulation by bank supervisors — but technological activities of nonbanks are inconsistently captured by supervision. The rapid pace of change in fintech in particular makes it difficult for international regulatory coordination to keep up. “The business models being developed and the risks associated with them are quite different in each country and the regulation needed in one market might not be appropriate for another,” ABA said. “As such an international regulatory framework for fintech is not appropriate at this time.”
ABA also contributed to a comment letter from the International Banking Federation that said an international fintech regulatory framework would be “premature.” For more information, contact ABA’s Rob Morgan.