Patrick McHenryChairman

Washington, September 28, 2018 -

The Subcommittee on Financial Institutions and Consumer Credit met today to examine new opportunities for technological innovation to develop new products and services consumers across the financial lobe need.

“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,” said Subcommittee Chairman Blaine Luetkemeyer (R-MO). “We can’t address innovation and growth without addressing the security of that data. I’m glad the July Treasury report made that a priority. The 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 Outdated and problematic regulations need to be overhauled, and growth must be monitored but not unnecessarily slowed.”

Key Takeaways

• Modern developments in digital technology are changing the way many financial services are offered and delivered to consumers and businesses. 
• Congress and the federal prudential regulators must continue to examine this innovative marketplace to understand the opportunities and challenges it presents, and to ensure that financial services entities are allowed to use fintech to deliver new products and services while also protecting consumers.

Topline Quotes from Witnesses

“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… 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.”  – Aaron Cutler, Partner, Hogan Lovells LLP

“Partnerships between traditional banks and Fintech companies are helping restart the flow of lending to these millions of Americans. Simply put, these partnerships are essential for non-prime borrowers… Fintech companies are delivering safer, more transparent, and more convenient financial services and products to meet consumers' demands for simple solutions that address common yet complex financial situations of American families… It is important for the United States to be a leader in Fintech. And policymakers must work together, put politics aside, and maintain support for the industry. The industry should continue to be regulated in a manner in which spurring innovation is the guiding principle, and consumer protection remains the top priority.” – Dion Harrison, Director, Elevate

“New technologies are quickly changing the ways all businesses connect with their customers. ‘Fintech’ is a term used to capture this convergence of banking and technology… Innovation in financial services has the ability to benefit consumers across the country and drive growth in our economy. New technologies allow financial service firms to connect with customers in new ways and offer them products that may better fit their needs. It can lower costs, making financial services more affordable for consumers across the country. It provides 3 added convenience and efficiency, giving customers the ability to manage their finances day or night from the palm of their hand. Technology can also lower the fixed costs for providing credit to small businesses, leading to greater capital access that spurs economic growth.” – T. Michael Price, President and Chief Financial Officer, First Commonwealth Financial Corporation, on behalf of the Pennsylvania Bankers Association

“Financial data aggregation in this context refers to services that, with customers’ consent, collect financial information from their various bank, brokerage, and retirement accounts, along with other sources, to be displayed and processed in an aggregated view… To that end, customers have been able to use their Fidelity data in third party applications for many years. However, the cybersecurity environment has significantly changed over that time and we have a responsibility to protect the very sensitive personal financial data and assets of our more than 30 million customers from misuse, theft, and fraud… In order to reduce the complexity of complying with 50 unique state data breach notification laws, the Treasury Report recommends that Congress enact a federal data breach notification law that would preempt state data breach laws.” – Stuart Rubinstein, President, Fidelity Wealth Technologies