By John Asbury
John C. Asbury is chair of ABA and CEO of Atlantic Union Bank in Richmond, Virginia.
Banking is a competitive sport.
As bankers, we compete on market share, product offerings, branding, the benefits packages we offer to our employees, and so much more.
America’s banks embrace competition. It makes us better at what we do by constantly challenging us to grow and evolve and be responsive to market forces. There should be robust competition within our financial services sector.
But where it gets thorny is when the rules of the road that apply to banks — rules intended to ensure things like consumer protection and safety and soundness — don’t apply the same way to nonbank financial service providers offering very similar products and services, or they competitively disadvantage banks to the point of squeezing them out of the market.
We’ve seen this happen already with credit unions and the Farm Credit System, where a difference in tax treatment allows these entities to offer essentially the same products to customers, but at much lower rates. There is a notable lack of regulatory parity between banks and credit unions — for example, credit unions aren’t subject to Community Reinvestment Act-like rules that banks are required to follow.
ABA is working hard to ensure that we have a vibrant, robust financial services marketplace where banks of all sizes can continue to thrive.
We’re seeing a similar imbalance in the fintech space, with new providers entering the market, offering products and services that compete directly with those offered by banks, all while skirting the rigid supervisory regime to which banks are required to adhere. Many of these providers are engaging in activities that are fundamentally the same as what banks do: making loans, taking deposits and facilitating payments.
At ABA, we have always taken a very practical approach: if it walks like a bank and talks like a bank, it should be regulated like a bank. This principle of “like activity, like regulation” is an especially useful guiding principle as policymakers confront a host of new financial services providers, and as they pursue necessary initiatives like developing a stablecoin regulatory framework.
With the Genius Act now law, regulation to balance the potential of stablecoin with limits on its possible negative consequences is essential. As the rules governing digital assets are crafted, ABA is advocating to ensure that whatever shape this new regulatory regime takes, it allows banks to fully participate — if they so choose — rather than be disinter-mediated by new players in the crypto market.
It’s also essential that rules around digital currencies maintain the safety and soundness of the U.S. banking sector, which remains a source of strength for our economy.
As we look ahead to the future of banking, we need to stay open to the changes that technology and new players will bring to the banking industry. But rest assured that ABA is working hard to ensure that we have a vibrant, robust financial services marketplace where banks of all sizes can continue to thrive.
