Legislative progress is on the horizon for fintech companies with the recent release of the Treasury Department’s report on how nonbanks, including fintech firms and data aggregators, should be regulated. The suggestions mentioned in the detailed report intend to make it easier for online lenders and payment companies to more easily compete with traditional banks.
In a statement accompanying the report, Treasury Secretary Steven Mnuchin explained how important it is for America to “keep pace with industry changes and encourage financial ingenuity to foster the nation’s vibrant financial services and technology sectors.” His words echo a plea from fintech luminaries to bring financial legislation into the 21st century.
The Treasury’s 222-page report endorses a national fintech charter developed by the Office of the Comptroller of the Currency. While this particular charter has met some opposition, it’s goals largely center on bringing non-traditional financial institutions into the national economy.
Joseph M. Otting, the comptroller of the currency, says “companies that provide banking services in innovative ways deserve the opportunity to pursue that business on a national scale.”
In addition to endorsing the charter, the Treasury also called for congress to create a single data security standard. Their recommendations encourage congress to “enact a federal data security and breach notification law” to protect consumers.
“Creating a regulatory environment that supports responsible innovation is crucial for economic growth and success, particularly in the financial sector,” says Treasury Secretary Steven Mnuchin. “We must keep pace with industry changes and encourage financial ingenuity to foster the nation’s vibrant financial services and technology sectors.”
While the Treasury’s report marks only the beginning of actions surrounding the regulatory future of fintech companies, it serves as a call to action for legislators and policymakers. The report makes more than 80 recommendations to regulators and Congress to encourage financial innovation within a regulated space.
For fintech companies, this is the breath of fresh air they’ve been waiting for. It’s an opportunity for them to finally bring their innovations and ideas to a national stage without having to crawl through mountains of red tape. We can only hope the report will serve as a catalyst for change. The future of fintech depends on it.