FinTechs Press States To Streamline Regulations


The Conference of State Bank Supervisors (CSBS) said earlier this month that it had put in place a set of action items to standardize the national experience of FinTechs and non-bank entities.

Among the recommendations the CSBS has announced and embraced – per the CSBS FinTech Industry Advisory Panel – are the creation of an online database for state licensing and FinTech guidance, a simplified examination system for non-bank entities operating in more than one state and the development of a 50-state model law geared toward licensing money services firms.

The panel, which traces its genesis back two years, is comprised of two groups, focused separately on lending and payments, and is in turn part of CSBS Vision 2020.

“As regulators overseeing non-banks, our goals are clear: Ensure the safety and soundness of the financial system, protect consumers and streamline the multistate experience,” said Mark Quandahl, chairman of the CSBS Emerging Payments & Innovation Task Force, in a statement. “The Fintech Industry Advisory Panel has developed actionable items for us; we embrace these recommendations, and we are now focused on implementation.”

The move comes after a period in which FinTechs have said they found the licensing process – now down to a state-by-state basis – to be time-consuming and less than efficient.

In an interview with PYMNTS conducted over email, CSBS Senior Vice President and Deputy General Counsel Margaret Liu said that the common concerns among the 33 FinTechs that were part of the panel focus on “creating more uniformity throughout the state system in definitions, disclosures, timelines, licensed activities and exemptions.

“This came through loud and clear during our work with these companies,” Liu said, adding that “it is important to note that this is not about de-regulation – it is about improving efficiency without sacrificing regulatory objectives and responsibilities.”

Among the technology-focused undertakings of the CSBS, said Liu, “we are building a web-based database of state guidance,” and a public request for information will soon go out to “solicit input” for the model money service business law. “We have formed a working group of state regulators to develop the model. There will be several hands-on demos of the new regulatory portal,” she said of the state examination system,” adding that a one company/one exam pilot started in January of this year. Liu pointed out that the online database of the aforementioned state licensing and FinTech guidance will go live later in 2019.

Looking forward, Liu said that “state regulators expect to hear from a wide range of interested parties about this work to support innovation and continue to protect consumers. Our FinTech industry advisory panel did include a few community banks. We had some robust discussions with them about community banking and innovation. One area that we heard about from these banks and other community banks is the challenges posed by the core service providers. This is an area that we are studying.”


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