What’s the single best thing government can do to speed innovation in financial services?
Training regulators on new tech, empowering consumers with transparency and loosening the rules for startups are key to the equation.
Co-Founder and Partner at Homebrew
Create "safe harbor" guidelines for experimentation so that teams can try new ideas without going through the regulatory and certification process required for large institutions.
To qualify for safe harbor, there would still be a minimum set of registration and disclosure required in order to protect customers/public, but startups could operate at those minimum levels for some period of time, then report out data if they wish to go forward.
CEO at Burnmark
Governments and regulators have the unenviable job of balancing innovation with control — they do see the benefits of promoting competition in the market, the creation of innovative products and services and supporting financial delivery to under-served demographics. However, it is difficult to let go of licensing and regulatory frameworks fully, as the primary objective of the regulator is to protect the consumer.
The single best thing the governments can do to facilitate innovation is the creation of mechanisms of collaboration. Better collaboration between federal and state governments, as well as between supervisors in different countries, can help harmonize regulations at a global level, thus creating efficiencies and economies of scale.
These mechanisms can also support better collaboration between banks and fintechs to ensure that the startups have access to a wider market, increasing the probability of their success. Such collaborative regulatory "bridges" are being built by several countries including the U.K. and Singapore, but more needs to be done at a global level to obtain true efficiencies.
Co-Founder and CEO at Borrowell
Give consumers the right to share their financial data if they so choose. This consumer-focused approach — frequently called "open banking" in countries like the U.K. where it's been implemented — would increase competition and consumer choice.
For example, consumers should be able to share their transaction data to get the best rates possible on loans and mortgages. This would speed innovation in financial services as the data advantages enjoyed by incumbents are eroded.
Co-Founder and CEO at Dave
The single best thing the government can do to speed innovation in financial services is to understand the immediate financial challenges that most Americans face. For example, we constantly hear about the lack of retirement savings among most Americans. That's a real threat to a huge portion of the population. But it's impossible to even think about saving for the future when someone is struggling to pay their rent or buy groceries.
The government and the fintech industry at large have a responsibility to understand and empower people to solve the day-to-day financial challenges they face. What are the solutions that will most positively affect the 40% of Americans who don't have $400 saved for an emergency? By understanding those challenges and providing solutions to them, we have a huge opportunity to truly improve the lives of millions of people today and help them build a solid financial foundation.
Edward S. Knight
Vice Chairman at Nasdaq
There is nothing more powerful than free markets with fair rules that catalyze innovation.
After all, innovation is the driving force behind the global economy. Over the past several years, emerging technologies — such as the cloud, artificial intelligence and machine learning — have transformed global capital markets, creating unprecedented opportunities and remarkable economic growth. Recent advancements in market data and analytics have accelerated innovation, driving down the fees that investors pay for stocks, mutual funds and ETFs to a fraction of what they were a decade ago.
Yet, we must go further if we want to ensure a level playing field for all investors.
We believe that the paradigm of public and private markets must shift to allow greater investor access to both markets, and government is critical in doing so.
To entice more initial public offerings, government must ease existing regulation to encourage companies earlier in their life cycle to go public, thereby giving more individual investors access to wealth creation opportunities.
While markets are built on timeless principles, today's existing patchwork of complex regulations remains outdated, with some securities laws dating back to the 1930s. Regulation must be driven by modern, evolving practices if we are to create interconnected markets that are safer and stronger for everyone.
By embracing emerging technologies and modernizing regulation, government will ignite a dynamic economy that fulfills the promise of tomorrow's markets.
Chief Strategy Officer at Extractable
Have all U.S. regulatory agencies agree on an innovation framework and update old regulations like eSig.
Managing Partner at Flourish Ventures
The pace of innovation in finance will likely pick up as big tech plays a bigger role in embedding financial services in our digital experiences. That means governments, especially financial regulators, must change how they think and behave to emulate the digital-natives they regulate — by adopting those same technologies that are transforming finance, from basic data science to machine learning.
The good news is that a number of regulators are already becoming digitally native. The U.K.'s Financial Conduct Authority (FCA) has undertaken a major data science overhaul. They were also the first regulator to test machine readable and executable regulation. The Monetary Authority of Singapore (MAS) has taken similar steps, building a capable data science team in house.
At Flourish, we've seeded the Alliance for Innovative Regulation (AIR), a nonprofit focused on making the U.S. financial regulatory system digitally native by convening fintech leaders, financial institutions, regulatory agencies — and their innovation teams — to work together. They conducted the first U.S. "techsprint," a hackathon designed for regulators to actively participate in testing and exploring new technologies — including by doing some coding themselves.
The regulator of the future will be data-driven, flexible, proactive and set up to regulate activities not entities. Similar to the FCA and MAS, regulators need to take meaningful steps in that direction. Digitally native regulation that protects consumers and promotes innovation will help create a fair financial system.
See who's who in Protocol's Braintrust.
Questions, comments or suggestions? Email firstname.lastname@example.org
Kevin McAllister (@k__mcallister) is an associate editor at Protocol, leading the development of Braintrust. Prior to joining the team, he was a rankings data reporter at The Wall Street Journal, where he oversaw structured data projects for the Journal's strategy team.
More from Protocol
The Wall Street Journal reports that the company is "resisting efforts to surrender emails, text messages and other documents sought by state investigators," who are studying the company for potential anticompetitive behavior.
The state accused Google of collecting students' location, browsing history, contact information and voice-recording data using its Chromebooks and education platform, without parental consent.
Bloomberg reports that Apple is considering adding the ability for users to change the default browser, email and music apps on iOS, as well as allowing third-party music apps to work with its HomePod speaker.