Republican members of the House Financial Services Committee, led by Chair Patrick McHenry (R-MC), provided their input for federal banking regulators on bank-fintech partnerships.
In a letter to regulators in response to a request for information (RFI), lawmakers emphasized that allowing responsible innovation through bank-fintech partnerships will benefit consumers and the financial system.
“Given fintech’s evolving nature and promising potential to enhance our financial system, it is essential that these newer products and services are not treated with undue regulatory scrutiny, which will only lead to stifling innovation,” the Republican lawmakers wrote.
They added that banking regulators must understand the unique nature of bank-fintech partnerships to avoid stifling innovation, ensure appropriate regulation, and deliver critical consumer protections.
“The potential benefits of bank-fintech arrangements hold significant promises: low-cost and more accessible financial products and services for consumers; tailored and seamless financial applications for consumers and businesses; an increased deposit base for community banks; and heightened competition in our financial system. As the RFI highlights, there are many different types of bank-fintech partnerships with varying complexities. Regulators should understand the nature of each type of partnership to avoid stifling innovation. Regulation and supervision should be appropriately scaled to address the nature of the partnership, not a one-size-fits-all approach. Consumers should be afforded the same protections they are afforded under existing law, regardless of how they access financial services,” they added.
The letter was sent to the heads of the Federal Reserve Board, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC).
“Heavy-handed and unclear examinations of fintech partner banks, ill-fitting regulatory treatment of blockchain technology used by financial institutions, and the FDIC’s flawed brokered deposits proposal will not protect consumers or the financial system. Instead of stifling innovation, regulators should allow responsible innovation to better serve our constituents and the financial system more broadly,” they continued.