For those who weren’t looking, you might have missed the release of the Framework for FinTechh white paper released by the White House last Friday. It’s the output of the work performed by the National Economic Council’s Adrienne Harris and her team, who I’ve been delighted to support.
The paper represents the policy objectives for FinTech, and a statement of the principles of how the regulators and government should support FinTech developments. In brief:
Government Policy Objectives for Financial Services:
- Foster Positive Financial Services Innovation and Entrepreneurship
- Promote Safe, Affordable, and Fair Access to Capital
- Strengthen Financial Inclusion & Health in the United States and Abroad
- Address Financial Stability Risks
- Further a 21st Century Financial Regulatory Framework
- Maintain National Competitiveness
Government Statement of Principles for supporting FinTech:
- Think Broadly About the Financial Ecosystem
- Start with the Consumer in Mind
- Promote Safe Financial Inclusion and Financial Health
- Recognize and Overcome Potential Technological Bias
- Maximize Transparency
- Strive for Interoperability and Harmonize Technical Standards
- Build in Cybersecurity, Data Security, and Privacy Protections from the Start
- Increase Efficiency and Effectiveness in Financial Infrastructure
- Protect Financial Stability
- Continue and Strengthen Cross-Sector Engagement
The paper discusses this in more depth (11 pages in total), but has no call to action or next steps. That’s because the new Administration takes over this Friday, when President-Elect Donald Trump takes office, and most of the incumbent White House staff leave and are replaced by the new President’s team. That amounts to 4,000 new staffers, with just the 100 butlers, maids, cooks, plumbers, engineers, and florists remaining.
Ah well, it will be interesting to see how the maverick new President views FinTech. If the members of Financial Innovation Now (FIN) [a public policy coalition comprised of Amazon, Apple, Google, Intuit and PayPal] have their way, then it will be substantial. In a letter to the President-Elect sent last year, the alliance asks for the following:
Technology and the internet are changing the way consumers and small businesses manage money, access capital, and grow commerce. Financial regulators around the world are paying close attention to this transformation and actively working to adopt policies that attract investment and create jobs in these new services, ultimately benefiting their own consumers and businesses. While America’s financial regulators and Congress have recognized this potential on a bipartisan basis, more leadership and federal coordination is necessary.
You campaigned on a promise to bring change to Washington, and your business experience, unique for any incoming President in history, offers a rare leadership opportunity that we believe sets the stage for modernizing some of our most antiquated financial rules. We are optimistic that you and your administration are well positioned to make America great at innovating in financial services and growing these jobs here at home.
We urge your administration to adopt a national vision and coordinated strategy to 1) ensure we grow financial technology jobs in the US, and 2) foster competition and innovation in financial services to better serve consumers and the economy. To achieve these goals we offer the following recommendations:
- Appoint Financial Regulators Who Value Technology’s Potential
- Promote Open, Interoperable Standards for Card Payment Security
- Streamline Money Transmission Licensing
- Ensure Consumer Access to Financial Accounts and Data
- Streamline Small Business Access to Capital via the Internet
- Help Consumers and Businesses Manage Money with Real-time Payments
- Leverage Mobile Technology to Increase Financial Inclusion
Like Brexit, no one knows what a Trump Administration will look like or achieve yet. I thought it was going to be loaded with bank bias, bearing in mind that most of the Administration are billionaires, millionaires and ex-bankers. As The Financial Times reported days after the election:
Wall Street is emerging as one of the biggest winners of the Trump transition with two of its biggest banks reporting stellar earnings off the back of the post-election market rally and Goldman Sachs veterans looking set to secure at least five top jobs in his administration. Although the president-elect attacked the financial sector during the campaign — and directly criticised rival Hillary Clinton for her ties to Goldman — the prospect of sweeping deregulation in banking and other US industries has buoyed global stock markets, helping Wall Street to record trading revenues.
But some of my American colleagues disagree with this view. The Hill says that:
The incoming administration has not actively addressed financial technology, but Trump has met with and encouraged leading technology companies. The financial industry, especially small and mid-sized banks, is poised to see potentially drastic changes in regulatory compliance requirements and the financial technology sector may finally receive clarity on their compliance obligations.
The OCC’s new charter, a version of the Financial Services Innovation Act, and a likely extreme reimagining of the CFPB may allow financial technology companies to bring products and services to market more quickly. These should provide them the confidence to know their compliance programs are appropriate and robust enough to withstand regulatory scrutiny.
We live in interesting times.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...