U.S. officials are arguing over who should have jurisdiction to regulate fintech firms while Europe and China are already enjoying the innovations in the nascent industry.
As the Chinese and European governments have come up with detailed technical standards for open banking apps, the U.S. is still facing an uncertain future due to legal fights, Simon Gray, a journalist, said in an article published on finance.toolbox.com.
Open banking gives way to innovative new players to take on established banks, providing online services to cater to the customers’ needs in the digital age.
In the U.S. fintech firms are still waiting to receive national licenses as no national API regulatory standards are in place. In January, the Office of the Comptroller of the Currency (OCC) challenged a lawsuit by the Conference of State Bank Supervisors to stop the OCC from releasing special-purpose national bank (SPNB) charters to fintech firms.
According to Gray, this legal move could delay the progress of the cashless payment system in the U.S. that would replicate the success of China’s Alipay and WeChat Pay. So far, the OCC has still not issued any license, casting doubts to the clarity and certainty of the outcome of the case.
The result of this legal battle will determine whether the many federal agencies in the U.S. should oversee the growing fintech firms that seek to combine financial data of customers while developing in-app purchasing platforms and operating digital banks all over the U.S., Gray added.
China’s approach to regulating open banking allows the industry to develop through experimentation and tackle problems as they appear by stepping in, according to an EY Global report. The Government, meanwhile, is establishing frameworks that bolster the growth of the industry in such a way that it offers greater protection to consumers.
In Europe, fintech developers are already carrying out enhanced security for customers. The region is already on its way to implement stronger security measures where consumers must use at least two modes of verification.