The Congressional Subcommittee on Financial Institutions and Consumer Credit held a hearing this week to discuss issues that are surfacing in the financial services industry with the rapid rise of new technology and the rate at which fintech organizations are bringing products and services to market. As InsideARM summarized, the committee was focused on the role of regulation and new financial technology:
Blaine Luetkemeyer (R-MO), who chairs the Subcommittee on Financial Institutions and Consumer Credit, set the context. He noted that the universe of technology is evolving on a nearly daily basis, and has revolutionized the way consumers make payments and interact with financial services companies. He said,
“From online lending and payment companies to blockchain and cryptocurrencies, advances in financial technology are changing the way financial markets work and how consumers access credit. With greater understanding of fintech’s capabilities, the Financial Services Committee and Congress can better create an environment that fosters certainty and responsible innovation while maintaining consumer protections.”
Two of the most limiting aspect of today’s regulatory environment as discussed by the panel who participated in the hearing included:
Technology and financial services are now fully integrated, however the regulations were written in the days of paper; and state by state rules for money transmission and lending prevent startups without the resources of major established companies from being able to enter the market.
Perhaps the latter comment will cause a review of the pending special charter proposed by the OCC under the last administration.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
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