State financial regulators discussed the benefits of financial technology, or fintech, solutions at the annual Nationwide Multistate Licensing System (NMLS) conference, held this week in Austin, Texas.
“We have embraced what we call ‘reg-tech’ to take state regulation to the next level,” Charles Cooper, chairman of the Conference of State Bank Supervisors (CSBS) and commissioner of the Texas Department of Banking said. “It is a system that has made the licensing process more efficient, including for those operating on a national basis, all while ensuring transparency to the consumer.”
Cooper praised NMLS for improvements to the regulatory system in the United States.
“NMLS is one of the great developments in financial regulation,” Cooper said.
The NMLS platform for licensing and registration is used by 62 state agencies. Through the system, companies can obtain state licenses and operate in multiple states for mortgage lending, consumer finance, money services, and debt collection. Approximately 20,000 companies operated under state licenses in NMLS by the end of 2016. Since 2011, the number of state-licensed mortgage companies in the United States has jumped 70 percent.
Further, state regulators have cut in half average approval times to license new companies.
“NMLS gives us a regulatory platform to get innovators up and running, and enable existing companies to expand their reach,” John Ducrest, commissioner of the Louisiana Office of Financial Institutions, said. “We recognize that fintech has the potential to deliver financial services more easily and perhaps more broadly. But we also recognize that business innovations must protect consumers and the safety and soundness of the financial system.”
State regulators balance these goals by crafting regulatory regimes that focus on business activities, not technology alone, Ducrest said.
“Financial technology is affecting so many business and policy decisions today,” Ducrest said. “Only by working together will we find the right answers.”