Banks are aggressively innovating and partnering with financial technology startups, but Congress and regulatory agencies could do more to promote “innovation-forward” policies, ABA President and CEO Rob Nichols told the House Financial Services Committee yesterday.
As the only representative of the banking industry testifying at the hearing, Nichols explained that banks continue to build on their history of technological innovation, and that many are currently partnering with nonbank fintech companies to bring their customers the latest tech through trusted and secure bank channels.
“When banks innovate and partner with startups to deliver new technologies, their customers win,” he said. “Banks have a long history of serving customers' needs and have established trusted relationships. These relationships are backed by a culture of compliance and regulatory oversight that ensures customers are protected.”
Nichols emphasized the win-win nature of fintech partnerships for banks, nonbanks and customers alike. Banks provide a trusted customer relationship, strong community presence and stable deposit funding, while customers get access to the most innovative technologies -- whether or not they emerged from a bank.
To help foster these partnerships, Nichols urged Congress and regulators to ensure that regulation is focused on activities, not charter type; to update laws and rules to reflect present-day and future technologies; and to provide a regulatory “greenhouse” for testing new fintech products.
Read the Testimony.