FinTech To Get Nod From Treasury For Financial Services Innovation

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The U.S. Treasury Department is poised to release a report over the next few weeks that will give some recommendations on regulating financial services, with a nod to the advantages of FinTech efforts and sandboxes that encourage innovation.

Reuters reported Friday (June 22) that the report, which is “long awaited,” will be the fourth and final in a series from the department on regulatory reforms, as mandated by President Donald Trump.

The previous reports had touched on asset management, banking, insurance and capital markets.

The report was telegraphed by Craig Phillips, who serves as counselor to Treasury Secretary Steve Mnuchin and who noted at a financial services conference in New York that “one of the challenges will be to navigate a regulatory system that was designed in and for a different era.”

Details stemming from the report as defined by Phillips include changes to existing regulations and some rulemaking guidance. The Treasury’s discussions will touch on arenas that include consumer and commercial lending, student lending and credit management, with some focus on modeling. Other tech-driven areas include digital financial planning.

The forthcoming Treasury document may mirror some of the findings that stemmed from the Innovation Readiness Playbook via PYMNTS, where 40 percent of the top performers in the financial institution (FI) industry trust sandboxes to scale functionality. Yet, overall, only 22 percent of FIs said they have used sandboxes.

Separately, the Bureau of National Affairs (BNA) reported that the report will include more than 100 recommendations. The Treasury Department may also include mention of regulatory sandboxes that help firms create new products and test them, Phillips said. Communication between corporates and regulators will also be examined in the report, the BNA noted. Chartering and licensing issues will be under scrutiny.

Phillips, as BNA reported, “did not fully endorse the federal special purpose national FinTech charter being considered by the Office of the Comptroller of the Currency,” but Phillips did say a federal license “has its pluses.”

All of this, he added, comes as FinTech financing has grown by 13 times over the past eight years worldwide, to as much as $22 billion.

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