The Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit recently conducted a hearing to explore efforts to bolster financial services digital data security regulations.
“The pace of technological development in financial services has increased exponentially and dramatically, offering both benefits and potential challenges to the U.S. economy and consumers,” Subcommittee Chairman Blaine Luetkemeyer (R-MO) said. “The (Treasury) Department has clearly outlined the need for a single federal data security and notification standard that raises the bar for all industries and ensures a better outcome for all consumers. Outdated and problematic regulations need to be overhauled, and growth must be monitored but not unnecessarily slowed.”
Officials said technological innovation has allowed traditional financial institutions and financial technology (FinTech) companies to develop new products and serve consumers’ financial needs across the globe, as well as potentially reduce operational risks for financial institutions, acknowledging rapid expansion of market participants in this area has brought new opportunities as well as new challenges for the regulatory structure.
“FinTech products and services, including peer-to-peer and consumer lending platforms, payment systems and a myriad of other services, are already in use and continue to be rapidly adopted by U.S. consumers,” Aaron Cutler, a hearing witness and partner at Hogan Lovells LLP, said. “Many of the FinTech products on the market provide consumers with greater access, choice, and empowerment for financial planning and decision making. The US will miss out on opportunities to realize the benefits from innovative FinTech development if it fails to take measures to improve its current regulatory structure.”
Congress and the federal prudential regulators have already begun to examine the marketplace to better understand its opportunities and challenges regarding financial services data regulation, officials said.