WASHINGTON, D.C. — Half of the bankers at CBA Live 2019 identified investments in technology as their No. 1 priority for the immediate future. On the heels of that audience response, a panel of regulators urged that innovation and technology is a top priority, as well.
One of the top objectives of the Consumer Financial Protection Bureau is to advance innovation, said Paul Watkins, director of the agency’s Office of Innovation. The bureau’s focus on innovation begins with its “regulatory sandbox” known as the Global Financial Innovation Network (GFIN).
The “regulatory sandbox” allows fintechs and banks to partner and pitch product ideas to regulators and receive a regulatory OK before moving forward.
“With some changes, we think [the regulatory sandbox] can be used to a greater degree,” Watkins said. “The question that needs to be answered is: ‘How can the industry partner with the CFPB and take advantage of this sandbox?’”
Back in August 2018, the CFPB asked for feedback on the document that outlines GFIN’s plans. “The comment period is closed on these policies,” Watkins said, noting the bureau received 30 comments. “We are taking those and reviewing them.”
Regulators have an obligation to ensure banks can work with fintechs without worry of crossing compliance standards, however, it is up to the banks to share concerns when working with fintechs, said Federal Reserve Board Manager of Innovation Policy Kelvin Chen.
“For a lot of banks, taking advantage of new technologies does not mean building it yourself — a lot of banks don’t have the resources to build that out,” Chen said. “How do we fix regulation so that banks and fintechs want to work together? How can banks safely connect to outside firms like fintechs?”
The Office of the Comptroller of the Currency started looking at innovation issues in 2015 with the goal of regulatory harmonization between regulators, fintechs, and banks. “I see regulation as putting together pieces of a puzzle,” said Beth Knickerbocker, chief innovation officer at the OCC.
One thing the OCC’s office of innovation does is warm handoffs, Knickerbocker said. “We do introductions, so banks and third parties feel comfortable meeting, and there is no barrier of perception.”
OCC urged banks not to stray from partnering and working with fintechs. “If you shoot off communication with third parties, then you are missing a huge opportunity,” she added.
