As regulators consider how to meet the challenges posed by fintech players, a new report from the Government Accountability Office noted that collaboration between the agencies could lead to better consumer protection and regulatory oversight in the fintech space.
The report pointed out that fintech products and services can benefit consumers and generally pose similar risks to traditional banking products, but that they are currently subject to an uneven regulatory framework, with a patchwork of state and federal agencies overseeing certain fintech providers, while others remain largely outside the regulatory scope. GAO also noted that the rise of fintech has created “data security and privacy concerns and could potentially impact overall financial stability as fintech grows.”
These factors underscore the need for greater interagency collaboration to address the challenges and opportunities of fintech, the report concluded. GAO recommended that agencies work together to define roles, responsibilities and desired outcomes for the oversight of fintech firms moving forward. It also noted the value of encouraging innovation through innovation offices and “regulatory sandboxes,” which “could result in better interactions between U.S. regulators and fintech firms and help regulators increase their understanding of fintech products.”
The American Bankers Association was a contributor to the GAO study, meeting multiple times with researchers and providing input throughout the process. The association has also created a number of resources to help banks navigate the ever-evolving fintech landscape, available online at aba.com/Fintech. For more information, contact ABA’s Rob Morgan.