Regulators should address the “evolving financial marketplace appropriately,” Rep. Maxine Waters, Chairwoman of the House Financial Services Committee said, adding that she has included fintech as one of the priority areas.
The lawmaker from California said her committee will focus on the growth of fintech companies and its potential to provide Americans with the new ways in banking and access to credit. She also stressed the importance of encouraging “responsible innovation” by putting appropriate safeguards to protect consumers without the need to close traditional lending institutions like community banks and credit unions.
Opportunities and concerns about fintech will also be highlighted in the US Senate. Sen. Mike Crapo, Chairman of the Committee on Banking, Housing, and Urban Affairs, echoed the views of Rep. Waters. He said that while the technology fuels innovations in lending, wealth management, digital payments and currencies, insurance and other financial industries, the government needs to examine these improvements to ensure that the appropriate regulation is in place.
Despite having one of the most advanced fintech ecosystems in the world, the US lags other countries in using this technology because of its current complicated regulatory environment. Companies that offer this technology need to comply with the rules and policies by state and federal regulators.
Recently, the House passed the Financial Technology Protection Act that would improve the efforts to protect fintech customers from terrorism and illegal abuses. This piece of legislation aims to establish interagency coordination and research as well as by collaborating with the private sector, among other objectives.
The illicit exposure and use of data from fintech lenders are also a major concern of financial institutions in the UK. A study published by the think tank Theos and financial ethics organization St Paul’s Institute warned that fintech companies might be using personal data to increase interest rates of potential borrowers who visit their websites regularly.