The United States needs a smarter FinTech regulation to compete globally

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The United States is lagging behind other major developed countries in offering fintech companies a legal framework that supports innovation and protects consumers by The Pew Charitable Trusts, Consumer Finance Director Nick Bourke said the United States lacks a consistent approach For example, the mobile payment industry has eight agencies Federals with some financial control and 50 states

"It is rather fragmented without a clear strategy," he said.

Nick Bourke, Consumer Financial Director, Pew Charitable Trusts Courtesy of Pew Charitable Trusts

A financial The innovation program needs clear objectives, coordination between regulators and strong consumer protection The United States has seen some attempts to provide a normative guide a for the innovation of the fintech, but nothing has taken hold so far, The Consumer Finance Protection Board (CFPB) has developed a letter of non-action but has not generated much participation and the OCC has opened an office for the 39; innovation and held innovation offices across the country to meet fintech banks and companies.

"In 2017, the Federal Commodity Futures Trading Commission established the CFTC Lab, a program to support the commitment between the commission and industry players seeking to create products that can benefit consumers in the raw materials market, as farmers and breeders. & nbsp; The program has two components: GuidePoint supports communication between companies and CFTC regarding the regulations and how to bring the products to market and CFTC 2.0 offers a network service to encourage collaboration between the participants in the sector . "

The Treasury Department is just beginning to consider innovation and the role of regulation, he said.

The Pew Trust report states that "United States Efforts to promote innovation are fragmented, characterized by a patchwork of state and federal initiatives that lack a common organizational strategy, which expose markets to all. regulatory uncertainty and to consumers of potentially harmful products and services without adequate safeguards. "

Other jurisdictions that are conducting to support innovation in financial technology – including Abu Dhabi. Australia, United Kingdom, Singapore and Hong Kong – centralized their regulatory approach to provide a coherent and predictable framework for Fintech companies and banks. They acted to build their financial industry, the Pew Trust report said.

"The Australian government has identified financial innovation as a potential lever to help it develop a more globally competitive financial sector." In an independent analysis commissioned by the United Kingdom in 2014, the value of its fintech market was almost $ 30 billion. PitchBook Data, an analyst and financial data company, said that in 2017 Fintech attracted nearly $ 2 billion in venture capital funding.

As the Pew Trust report states:

"The regulators examined in this document usually deal with financial innovation in three ways: to create awareness programs to help businesses navigate the regulatory landscape and to support transparency on new products and services, changing the regulatory framework to respond to the effects of emerging technologies and suspending the obstacles that companies enter the market to promote innovation. "

However, in the United States" In recent years it has been Introduced to Congress only an important piece of legislation to create a nationally coordinated regulatory sandbox The 2016 Financial Services Innovation Act, which did not reach the vote and was not reintroduced, would create a system to reduce regulatory barriers to new products. "The legislation lacked substantial consumer protection, the Pew Trust added.

The US Treasury Building in Washington, DC – Photographer: Andrew Harrer / Bloomberg

It is a criticism that Bourke made a recently published Treasury document on innovation – he talks about rescinding a rule of the payday loan that provides important protection for consumers,

The report of the US Treasury Department " A financial system that creates economic opportunities: Nonbank Financials, Fintech and Innovation, " look at the 39; innovation in terms of global competition.

"While the rest of the world takes steps to improve its ability to create, develop and deploy new innovative products and services in the financial sector, the United States risks losing by not providing adequate regulatory clarity and assurances and removing unnecessary barriers to Innovation, "he says.

The Treasury report requires more flexibility in regulation. Regulatory authorities should develop a way of working with businesses to help develop innovation while protecting consumers. He also suggested that federal and state financial regulators develop a unified solution to create a regulatory sandbox where businesses can try innovative approaches to financing. & Nbsp; He cited the Singapore Monetary Authority (MAS) where "the sandbox is not designed to help companies circumvent legal and regulatory requirements, but is instead intended to foster efficiency and manage risks in the financial sector."

In the United Kingdom The Financial Conduct Authority (FCA) launched a regulatory sandbox in 2014. The participating companies are assigned a dedicated case officer in a program that supports the discussion and collaboration between the regulator and the financial technology.

This requires some effort, says the Treasury report, because it requires regulators to have the technical expertise to understand existing and emerging technologies.

The Pew Trust report concluded:

"… while the regulatory authorities abroad have found ways to promote innovation through nationally coordinated strategies that prioritize protection of consumers, US efforts have been hampered by fragmented institutional frameworks that do not adequately establish regulatory priority

The Treasury report reached similar conclusions and recommended "that financial regulators increase their efforts to bridge the gap between regulators and start-ups ".

Technically innovative companies often do not make a lot of money, so regulators should" set up offices in different parts of the country rather than requiring entities to come to Washington, DC Unlike financial institutions In office with established government relations offices, start-ups may be less familiar with engaging with kings federal judges, but equally critical for regulators to engage with, "the report added. He also encouraged US regulators to look at greater international cooperation "such as the recent agreement between the CFTC and the UK Financial Conduct Authority."

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The United States is lagging behind the other major developed countries in offering fintech companies a framework that supports innovation and protects consumers, speaking in a webinar in preparation for publication of an article by The Pew Charitable Trusts, Consumer Financial Director Nick Bourke said the United States lacks a consistent approach For example, the mobile payment industry has eight federal agencies with a supervision of finances and 50 states with its own rules, he said. [1965902] "It is quite fragmented without a clear strategy," he said.

Nick Bourke, director of consumer finance, Pew Charitable Trusts Courtesy by Pew Charitable Trusts

A financial innovation program needs clear objectives, coordination between regulators and strong consumer protection – the United States has seen some attempts to provide a normative guide to fintech innovation, but nothing has taken root so far, he said. The Consumer Finance Protection Board (CFPB) developed a non-action letter but did not generate much participation and the OCC opened an office for innovation and held hours of Innovation Office across the country to meet banks and fintech companies. [19659001] "In 2017, the Federal Commodity Futures Trading Commission established the CFTC Lab, a program to support the commitment between the commission and industry players seeking to create products that can benefit consumers in the commodity market As farmers and breeders, the program has two components: GuidePoint supports communication between companies and CFTC on regulations and how to bring products to market and CFTC 2.0 offers a network service to foster collaboration among industry participants. "[19659026] The Treasury Department is just beginning to look at innovation and the role of regulation, he said.

The Pew Trust report said that "United States Efforts to foster innovation are fragmented, characterized by a patchwork of state and federal initiatives that lack a common organizational strategy, which expose markets to all. regulatory uncertainty and to consumers of potentially harmful products and services without adequate safeguards. "

Other jurisdictions that are conducting to support innovation in financial technology – including Abu Dhabi. Australia, United Kingdom, Singapore and Hong Kong – centralized their regulatory approach to provide a coherent and predictable framework for Fintech companies and banks. They acted to build their financial industry, the Pew Trust report said.

"The Australian government has identified financial innovation as a potential lever to help it develop a more globally competitive financial sector." In an independent analysis commissioned by the United Kingdom in 2014, the value of its fintech market was almost $ 30 billion. PitchBook Data, an analyst and financial data company, said that in 2017 Fintech attracted nearly $ 2 billion in venture capital funding.

As the Pew Trust report states:

"The regulators examined in this document usually deal with financial innovation in three ways: to create awareness programs to help businesses navigate the regulatory landscape and to support transparency on new products and services, changing the regulatory framework to respond to the effects of emerging technologies and suspending the obstacles that companies enter the market to promote innovation. "

However, in the United States" In recent years it has been Introduced to Congress only an important piece of legislation to create a nationally coordinated regulatory sandbox The 2016 Financial Services Innovation Act, which did not reach the vote and was not reintroduced, would create a system to reduce regulatory barriers to new products. "The legislation lacked substantial consumer protection, the Pew Trust added.

US Treasury Building in Washington, DC – Photographer: Andrew Harrer / Bloomberg

It is a criticism that Bourke made a recently published Treasury document on innovation – he talks about rescinding a loan rule payday provides important protection for consumers,

The US Treasury Department's report "A financial system that creates economic opportunities: Nonbank Financials, Fintech and Innovation", looks at innovation in terms of competition global.

"As the rest of the world takes measures to improve its ability to create, develop and deliver innovative new products and services in the financial sector, the United States risks losing oneself by failing or providing adequate regulatory clarity and insurance and removing unnecessary obstacles to innovation, "he says.

The Treasury report requires more flexibility in regulation. Regulatory authorities should develop a way of working with businesses to help develop innovation while protecting consumers. He also suggested that federal and state financial regulators develop a unified solution to create a regulatory sandbox in which businesses can try innovative approaches to finance. He cited the Singapore Monetary Authority (MAS) where "the sandbox is not designed to help companies circumvent legal and regulatory requirements, but is instead intended to foster efficiency and manage risks in the financial sector."

In the United Kingdom The Financial Conduct Authority (FCA) launched a regulatory sandbox in 2014. The participating companies are assigned a dedicated case officer in a program that supports the discussion and collaboration between the regulator and the financial technology.

This requires some effort, says the Treasury report, because it requires regulators to have the technical expertise to understand existing and emerging technologies.

The Pew Trust report concluded:

"… while the regulatory authorities abroad have found ways to promote innovation through nationally coordinated strategies that prioritize protection of consumers, US efforts have been hampered by fragmented institutional frameworks that do not adequately establish regulatory priority

The Treasury report reached similar conclusions and recommended "that financial regulators increase their efforts to bridge the gap between regulators and start-ups ".

Technically innovative companies often do not make a lot of money, so regulators should" set up offices in different parts of the country rather than requiring entities to come to Washington, DC Unlike financial institutions In office with established government relations offices, start-ups may be less familiar with engaging with kings federal judges, but equally critical for regulators to engage with, "the report added. He also encouraged US regulators to look at enhanced international cooperation "such as the recent agreement between the CFTC and the British Financial Regulator."

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