A financial technology advocacy group has reached out to President-elect Donald J. Trump, encouraging him to create a new position at the Treasury Department to support fintech. The position that the President-elect and his administration will take on financial technology is still unclear. As a result, advocacy groups are attempting to gain leverage on these important issues.
What happened
In a letter to President-elect Donald J. Trump, Financial Innovation Now (FIN) suggested the creation of an Undersecretary for Technology position in the Department of the Treasury to “ensure the growth of financial technology jobs in the U.S.” as well as “foster competition and innovation in financial services to better serve consumers and the economy.”
“Technology and the Internet are changing the way consumers and small businesses manage money, access capital, and grow commerce,” Executive Director Brian Peters wrote. “While America’s financial regulators and Congress have recognized this potential on a bipartisan basis, more leadership and federal coordination is necessary.”
Federal agencies have developed some initiatives and programs to enable innovation in financial services, the letter acknowledged—citing the Consumer Financial Protection Bureau’s Project Catalyst and the Office of the Comptroller of the Currency’s “Innovation Initiative”—but FIN advocated for the appointment of financial regulators who “value technology’s potential.”
“In particular, we encourage the appointment of a Treasury Undersecretary for Technology, responsible for developing a national vision and coordinated strategy to ensure America is the best country to create companies and grow jobs developing financial technologies; and work across all federal financial regulators to foster competition and innovation in an antiquated banking sector to better serve consumers and the economy,” the group wrote.
The Trump administration should also promote open, interoperable standards for card payment security, FIN said. “[I]ncumbent financial services companies are building closed and proprietary networks, which locks out innovation and diminishes the greatest potential security and fraud reduction methods,” according to the letter. “FIN urges your administration to scrutinize technological barriers to payment security innovation and explore authentication methods that are truly standards-based, open, and interoperable.”
Other priorities for the group include streamlined money transmission licensing so that payment innovators are not forced to obtain and update licenses in nearly every state, consumer access to financial accounts and data (via whatever application or technology they wish, without charges that favor any one application or technology over another), and small business access to capital via the Internet.
“Antiquated state lending rules did not contemplate Internet-based services, and these inconsistencies may actually hold back the availability of capital from main street businesses that need it most,” FIN said, recommending that the President-elect’s administration and Congress “streamline lending laws across state jurisdictions to account for the innovative lending market of today.”
The group also recommended setting a deadline for real-time payments. While check deposits and payments can take days to clear through the system in the United States, other countries have already achieved real-time payment, FIN wrote. “American consumers cannot afford delays in accessing their own money,” according to the letter. “FIN urges your administration to ensure the availability of real-time payment networks for all Americans by 2020 and ensure such networks are affordable and secure.”
Finally, FIN advocated for leveraging fintech to lower the amount of unbanked and underbanked households in the country, encouraging President-elect Trump “to promote technology and mobile financial services as a means to overcome old barriers to financial services.”
To read the letter, click here.
Why it matters
The financial technology advocacy group encouraged the Trump administration to create a unified, coordinated national strategy to address the growing fintech market. Under the leadership of a Treasury Department Undersecretary of Technology, President-elect Trump should embrace technology in the world of finance by achieving real-time payments, ensuring consumer access to financial accounts and data, and leveraging mobile technology to increase financial inclusion, FIN advocated.
It is possible that a dedicated Undersecretary of Technology will work more swiftly to implement the results of the Request for Information regarding the Marketplace Lending Industry that it completed in early 2016. However, being more of a policy agency than regulator, the impact of the Treasury Department under any President in modernizing the current charter and licensing process is questionable. We expect to see more activity from the Office of the Comptroller of the Currency, Consumer Financial Protection Bureau and Federal Deposit Insurance Corporation in the coming year, with possible significant structural changes resulting from financial technology.
