April 07, 2021

New NAFCU video urges policymakers to provide much needed fintech regulation

FintechNAFCU Tuesday released a new video to alert policymakers and consumers of the growing issue of financial technology companies applying to become a bank or acquiring a bank. In the video, NAFCU urges policymakers and federal financial regulators to make necessary changes to combat the risk this poses to the financial system.

“While financial technology companies begin to acquire bank charters but remain unchecked, NAFCU has released a new video to bring awareness to the growing risk this poses to the financial system,” said NAFCU President and CEO Dan Berger. “NAFCU believes federal financial regulators have a role to play in the supervision and regulation of fintechs under their existing authorities.

"Fintech companies have taken root in the cracks of a fragmented regulatory system, and consumers deserve to be fully aware of what this landscape might entail, including lack of oversight of data and lack of guarantees on funds. The longer this mounting issue goes on without proper supervisory oversight, the greater the risk of a significant loss or violation of consumer rights. Federal regulators must ensure that new models of banking are held to the same high standards that exist for credit unions and banks. A level playing field for all financial institutions is necessary to prevent damage to the financial system,” said Berger.

Following the release of the video, Berger published an op-ed further detailing these risks and outlining steps policymakers can take to ensure fintech banks operate on a fair and level playing field with credit unions.

NAFCU is leading efforts with regulators and lawmakers to ensure these issues are addressed and recently wrote to the CFPB, the Office of the Comptroller of the Currency (OCC), and the House Financial Services and Energy and Commerce Committees on this topic. In addition, the association has created a new resource to break down four examples of potential "chartering schemes" used to acquire a bank charter, along with several legislative recommendations that will facilitate a level playing field.

The association believes it is imperative that regulators and lawmakers provide greater legal clarity and a playing field that serves highly regulated institutions like credit unions just as well as nonbank, fintech companies.

All resources and recent coverage of fintech issues can be found on NAFCU's new issue advocacy page.