CSBS’s Vision 2020 initiative is designed to result in a more efficient regulatory system that recognizes standards across state lines. It will better support start-ups and enable national scale while protecting consumers and the financial system.
“CSBS, the states and territories will create consistent and data-driven solutions that support innovation by minimizing friction in the state regulatory system,” the board’s policy statement said. “By 2020, state regulators will adopt an integrated, 50-state licensing and supervisory system, leveraging technology and smart regulatory policy to transform the interaction between industry, regulators and consumers.”
Specifically, CSBS calls for the redesign of the Nationwide Multistate Licensing System (NMLS). The redesign will use data and analytics to provide a more automated licensing process for new applicants, streamline multi-state regulation, and shift state resources to higher-risk cases. State regulators also will ensure transparency through NMLS Consumer Access, which was viewed 3.7 million times last year.
It also plans to harmonize multi-state supervision. CSBS has created working groups to establish model approaches to key aspects of non-bank supervision. The groups will work to enhance uniformity in examinations, facilitate best practices, and capture and report non-bank violations at the national level. CSBS will create a common technology platform for state examinations.
Through the initiative, CSBS will also form a fintech industry advisory panel, which will identify points of friction in licensing and multi-state regulation, and provide feedback to state efforts to modernize regulatory regimes. The panel will focus on lending and money transmission, and discuss a wide range of solutions.
CSBS will assist state banking departments in determining where new expertise is most needed, identify and address weaknesses, update supervisory processes, and compare them to and learn from other state departments. These higher standards will be validated through an enhanced CSBS accreditation program.
CSBS vows to make it easier for banks to provide services to non-banks. CSBS is stepping up efforts to address de-risking – where banks are cautious about doing business with non-banks, due to regulatory uncertainty – by increasing industry awareness that strong regulatory regimes exist for compliance with laws for money laundering, the Bank Secrecy Act, and cybersecurity.
It would also like to make supervision more efficient for third parties. Banks of all sizes work with a variety of third-party service providers, including fintech companies. CSBS supports federal legislation that would allow state and federal regulators to better coordinate supervision of bank third-party service providers.
“We are committed to a multi-state experience that is as seamless as possible,” CSBS Chairman and Texas Commissioner of Banking Charles Cooper said. “Through Vision 2020, state regulators will transform the licensing process, harmonize supervision, engage fintech companies, assist state banking departments, make it easier for banks to provide services to non-banks, and make supervision more efficient for third parties.”