The Center for Financial Services Innovation, composed of Charles Schwab and some of the biggest banks in the nation, is pushing for an interagency innovation team of federal financial regulators to spur fintech growth.
“The team may help make duplications and gaps more obvious, and propose solutions,” said CFSI Vice President Jeanne Hogarth in prepared testimony for a Congressional hearing on fintech Thursday.
The consortium would serve as a clear front door to help entrepreneurs unfamiliar to get the information they need about financial regulations, she added.
Big hindrances to growth are the different missions of the many federal agencies that oversee fintech, she said, claiming that many state rules are stifling the development of financial technologies.
“These hurdles could be reduced by providing ways to harmonize state license applications, to arrange for reciprocal recognition of licenses and to arrange for multistate or national licensing agreements,” Hogarth said.
The Center for Financial Innovation is funded by some of the nation’s most prominent financial companies, including Schwab, Bank of America, MetLife, Citigroup, JPMorgan Chase, Morgan Stanley and VISA. The nonprofit Bill & Melinda Gates Foundation is also a member of the organization.
A host of financial institutions, from large money-center banks to smaller credit unions to community-based non-profits, are embracing fintech as a way to better serve their customers, Hogarth pointed out.
“What people want and need is more automation of good choices, but not full automation—they want control and transparency. They want advice that is in their own best interest. Financial technologies and innovations can help consumers spend, save, borrow and plan safely and effectively, enabling them to manage their day-to-day finances [and] weather financial shocks,” she said.
Fintech innovation must be balanced with consumer protection, she said.
Consumers Union Attorney Christina Tetreault told the congressmen they and regulators should not hesitate to hold fintech companies to the highest
standards.