Investing in Financial Health: Sarah Willis and Allie Burns

I’m delighted to say that my guests today are Allie Burns, the CEO of Village Capital, and Sarah Willis, Head of Financial Health Work at JPMChase and former Director at the MetLife Foundation.

Among the many things that have been disrupted by the pandemic is our podcast schedule at Barefoot Innovation. Regular listeners know that we had several shows in the queue early in the year, and ended up deferring them as we turned to COVID-related programming. For today’s show, this delay is extra complicated because during that interim period, Sarah actually changed jobs. At the time we recorded this conversation, she was a Director at the MetLife Foundation, and so the show focuses on MetLife and its work with Village Capital. Sarah has now moved on to lead financial health work at JPMC, which means she is still working on the issues we discuss in this episode.

Our conversation focuses on how to bring more capital into fintech ventures that really advance consumer financial health. Allie lays out today’s venture capital landscape, which is heavily skewed to a few markets and away from startups that work on building financial health. Sarah explains MetLife’s efforts on how to influence the fintech industry to diversify both founders and the customers served.

The discussion highlights the shift that’s happening today, away from framing this challenge as financial “inclusion” and toward viewing it in terms of financial “health.” Not so long ago, the champions of inclusive finance defined the goal as everyone having a bank account. We used to talk mainly about people being “unbanked,” as if having a transaction account would solve the financial inclusion problem. Today, we’ve realized that, if the goal is to help people thrive financially, the solutions are complex. Sarah and Allie describe international research that bears this out, and they talk about the need for, as they put it, “non-extractive” business models. These include a rising focus on behavioral science -- understanding how people really live and how they really make decisions, and therefore what can be done with savings tools like “set and forget” plans and prize-based incentives that leverage the human brain’s attraction to gambling.

My guests also talk about the ugly underside of financial “inclusion,” in the US and globally, and what regulators need to do to prevent abuse.

As we catch up with these old shows, it’s interesting to discover that some have taken on a bit of a time capsule quality, even though they are only a few months old. This one was recorded months before the killing of George Floyd. Today I think it resonates even more than it would have if we’d posted it pre-pandemic. With most of the financial world now mobilizing to do better on race and gender diversity, you’ll be interested to hear my guests debunking the notion that VC’s can’t find founders who are women or people of color. 

A final note: I served on the board of the Center for Financial Services Innovation, CFSI, for years, starting as we began to shift our strategic focus from financial inclusion and “unbanked” issues, to advancing financial health. That journey culminated in changing the organization’s name to the Financial Health Network and adopting a strategy of multi-dimensional solutions that are bigger than the financial sector -- right around the time I stepped down as board chair. Check out FinHealth’s efforts, including the great new podcast by CEO Jennifer Tescher.

Links

• Transcript

• Metlife Foundation website  

• Common Cents Lab 

• NLift Manifesto 

• Inclusive Fintech 50 

• Gallup Research on financial health  

• Village Capital website 

• Beyond Borders Report (scaling a fintech startup in Latin America) 

• Beyond Payments Report (the next generation fintech startups in sub-saharan Africa) 

• Flipping The Power Dynamics Report (can entrepreneurs make successful investment decisions?) 

• Vox Article About Flipping The Power Dynamics Report 

• Finance Forward US 2019 

• The Village Capital story

• Finance Forward announcement

• ‘Why an equity-only investment strategy overlooks many promising entrepreneurs’

• Companies mentioned: Übank, PiggyVest, Fig Loans

• MiddleGame Ventures

• Jerry Nemorin and LendStreet example

• Zebras Unite

More on Sarah & Allie

Sarah Willis is Head of Financial Health Work and JPMC. She was previously the Director at MetLife Foundation, focuses on strategic financial health grant making in the U.S., Europe, and the Middle East, and manages a global portfolio of inclusive fintech initiatives. She also leads the Foundation’s outcomes measurement efforts. At the Clinton Global Initiative, Sarah focused on catalyzing economic development through entrepreneurship in Europe, Middle East, and Africa. She has lived and worked in Turkey and Germany - as a Fulbright Fellow in Nuremberg and a researcher on solutions to SME development in Turkey. She holds a MA in International Affairs from The Fletcher School at Tufts University and a BA in International Affairs and German Studies from the University of Minnesota.  

Allie Burns joined Village Capital in 2016 and was named CEO in January of 2019. In her role at VilCap, she oversees their team of “rabble rousers” dedicated to creating new opportunities for entrepreneurs who have been traditionally overlooked by early stage investors.  Prior to joining Village Capital, Allie spent seven years working directly with technology pioneers Steve and Jean Case as a senior executive at the Case Foundation. She also served as part of the core team who created and launched the Rise of the Rest initiative at Revolution, the venture capital firm created by Steve Case.  Prior to joining Revolution and the Case Foundation in 2009, Allie worked in the technology and media space. She holds an undergraduate degree from Boston University and an MBA from Thunderbird School of Global Management.

More for our Listeners

Please follow AIR on LinkedIn and Twitter, and also follow me personally on Twitter @JoAnnBarefoot. And please be sure to leave us a five-star rating on your favorite podcast platform.

We have wonderful guests coming up. They include Scott Cook, Founder of Intuit; Renaud Laplanche, Co-founder and CEO of Upgrade, Linda Lacewell, Superintendent of the New York State Department of Financial Services; Ann Cairns, Executive Vice Chair of Mastercard; Jeremy Allaire, CEO of Circle; and Sam Graziano, CEO of Fundation. 

We also have CFTC Chairman Heath Tarbert coming up on our Future of Regulation Series.

I am also going to be reading the whole Regtech Manifesto in podcast form, for those who would rather listen than read. Watch for that coming soon!

The newest addition to my speaking events is the CFTC Empower Innovation conference, where I will be doing a fireside chat with Chairman Tarbert to kick off the agency’s conference series -- be sure to join us! I will also be speaking at many other virtual conferences, including LendIt Fintech (for a fireside chat with FDIC Chairman Jelena McWilliams), Fintech South 2020 (for a different chat with the FDIC Chairman), Summit on Making Finance Work for Women, the A-Team Regtech Summit, and FS Vector RAFT, as well as the Singapore Fintech Festival and Fintech Abu Dhabi.

I hope everyone stays safe and keeps innovating!

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

Fast-forward on Community Bank Technology: ICBA CEO Rebecca Romero-Rainey

Our regular listeners know I have a long history of working with community banks, including in small towns and rural communities across the country. So it’s a special treat to have today’s guest on the show. She is Rebeca Romero-Rainey, President and CEO of the Independent Community Bankers of America.

For our listeners in other countries, you may know that the United States has an unusual banking structure that includes thousands of small banks (and also thousands of credit unions). While large banks hold most of the banking assets in the US, small banks are the backbone of financing in many parts of the country. They draw on a tradition of knowing their customers personally, delivering great face-to-face service and, sometimes, being positioned to take a chance on a customer because they know her or him personally and can do the customized risk assessment that a big bank with high volume usually cannot perform.

Rebecca embodies this proud tradition. She is a third generation community banker -- her grandfather founded Centinel Bank in northern New Mexico, and was succeeded by Rebecca’s father, and then by her, for twenty years. As you will hear in our conversation, I have a home in the mountains near Taos New Mexico, and have been in her bank, and we have some interesting friends in common, including the great artist Ed Sandoval, whose paintings hang in the bank lobby. As Rebecca says banks like these are vital to their communities, not just financially, but in weaving together the social and cultural fabric, the quality of life. As just one example, she notes that small banks provided 60% of the loans extended under the Paycheck Protection Program, the PPP, to rescue small businesses during the COVID pandemic.

These banks are important, and many are struggling today. It’s hard for them to go after customers outside their markets, but it’s easy for outside competitors to reach into their backyards and lure customers away with attractive pricing or newer technology. Many also operate in markets that are growing very slowly, or not at all.

In my view, whether the ICBA succeeds in its mission of enabling these institutions to flourish will depend on one factor above all -- whether the banks can easily adopt better technology. They need great technology to run their business, driving down costs of operations, including the tremendous costs of regulatory compliance. These are disproportionately high for smaller banks, compared to either large institutions that have economies of scale or to small fintechs that have no old legacy technology (see my series of papers from my senior fellowship at Harvard University, on these cost problems).

Community banks have a second burning need for cutting edge technology -- to serve their customers, including the millennials who have become the largest generation ever. People today expect everything we use, including banks, to have great technology and UX. Without better tech, these banks won’t be able to grow. 

So, how are we going to make that happen?

For most banks, there is only one answer. Very few can develop cutting edge technology on their own. Instead, they have to work with innovative companies. They need simple easy ways to work with fintech and regtech vendors and partners.

Today, this is a struggle. Most small banks have aging core IT systems that are difficult and expensive to update, to integrate with digital technology, and to tap into to access the bank’s own data. Small banks also struggle with regulators’ third-party risk rules, most of which were written in pre-digital times and make it hard to onboard new tech vendors and partnerships. There is also a steep learning curve.

Rebecca shares how the ICBA is tackling these challenges. She describes the banks’ most urgent tech needs. She talks about how the Covid crisis is accelerating technology adoption, by banks and their customers alike. She talks about the need for communication, to help bankers know what is possible. Rebecca tells us the ICBA has appointed a chief innovation officer, Charles Potts, to launch a strategic focus on supporting innovation efforts for community banks, specifically to move toward a level playing field to ensure that community banks can play by the same rules as their competition. And she explains the ICBA’s partnership with the Venture Center in Arkansas, run by Wayne Miller, which helps find and test new tech solutions for banks.

As an example of the potential, here is a new article by Melissa Koide and me in the Financial Brand, on how community banks can use new high-tech underwriting to grow in place, vertically within their current geographic footprints, by being able to make sound loans to creditworthy consumers and small businesses who today are screened out by traditional risk tools. And please also take a look at AIR’s Regtech Manifesto, which lays out our vision for modernizing the financial regulatory system for the digital age -- something that has to happen, if community banks are going to thrive.

Rebecca says the key to the future is to press the fast-forward button on technology implementation. I know you are going to enjoy my conversation with ICBA CEO Rebecca Romero-Rainey.

Links

• Transcript

• Paintings by Ed Sandoval in Taos New Mexico

• SBA releases loan-level PPP data

• Rebeca Romero Rainey: Let’s bring people together

• Rebecca's Bio

• About the ICBA

• Rebecca on LinkedIn

• ICBA on LinkedIn

• Twitter: @romerorainey @ICBA

• Facebook: https://www.facebook.com/icbaorg

• YouTube: https://www.youtube.com/user/CommunityBankChannel

• Instagram: @myicba @banklocally

• Centinel Bank in Taos

• Ed Sandoval’s Gallery

More on Rebeca

Rebeca Romero Rainey is president and CEO of the Independent Community Bankers of America® (ICBA), the leading advocacy organization representing community banks. A third-generation community banker born and raised in Taos, New Mexico, she is the former Chairman and CEO of Centinel Bank of Taos. Rebeca entered the national stage by serving on committees within ICBA, and she played a key role in the formation of ICBA’s Minority Bank Council and served as its first chairman. She was later nominated to ICBA’s Executive Committee, and in 2016, became ICBA chairman. 

Rebeca has also served on the FDIC Advisory Committee on Community Banking and the Kansas City Federal Reserve Community Depository Institution Advisory Council. She has been featured on CSPAN, MSNBC, CNBC, NPR; has testified before Congress; and has delivered speeches before the Federal Reserve, OCC and FDIC.

More for our Listeners

Please follow AIR on LinkedIn and Twitter, and also follow me personally on Twitter @JoAnnBarefoot. And please be sure to leave us a five-star rating on your favorite podcast platform.

I am very excited to announce that my upcoming guests include Scott Cook, Founder of Intuit, Renaud Laplanche, Co-founder and CEO of Upgrade, and Linda Lacewell, Superintendent of the New York State Department of Financial Services.

I am excited to see the fall events schedule shape up! I will be speaking at many virtual conferences, including FS Vector RAFT, LendIt Fintech (for a fireside chat with FDIC Chairman Jelana Mc Williams), Finovate Digital,  Summit on Making Finance Work for Women, Fintech South 2020 (a different chat with the FDIC Chairman), and A-Team Regtech Summit, as well as the Singapore Fintech Festival and Fintech Abu Dhabi.

The final judging for the G-20 Global Techsprint is underway. I’m serving as a judge on the Digital Regulatory Reporting solution sprint. You can find more information on this here.

If you have not already had a chance, please make sure to comment on our Regtech Manifesto: Redesigning Financial Regulation for the Digital Age. We have already received many thoughtful comments and would love to hear more about what people are thinking. We’ll be feeding the results into a new initiative, the Regulatory Design Project.

Support our Podcast

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

Programmable Money: Sila Cofounders Shamir Karkal and Angela Wilson

Way back at the start of Barefoot Innovation, our very second episode featured one of the guests we have with us today. He is Shamir Karkal, CEO of Sila, and he’s joined on today’s show by his cofounder and Sila’s General Counsel, Angela Angelovska-Wilson.

That prior episode featured Shamir as the cofounder of Simple, along with Josh Reich. I think Shamir and Josh may have been the very first fintech founders I got to know, years earlier, and they have both been my friends ever since. Shamir has been on a journey that started in the tech world, and took him to Simple, and then to BBVA, and now to founding Sila. At every step, he has been building things that leverage digital technology to make finance more….well, simple. Easier for customers. Easier for financial companies. More inclusive. More connected.

As he explains in this conversation, he left BBVA motivated to democratize finance by making it easy for people to start fintechs and make programmable money. He had realized the missing element was an API platform for programming payments and money. So Sila is building a back-end payments network that connects any participant on its with instant payments, bypassing the ACH process.

Shamir and Angela explain the fascinating meanings of the word, Sila. They describe their business model, their customer base, and their back-end infrastructure based on Ethereum. They explain their revenue model -- they say their pricing is so good, especially for startups, that they put it right on their homepage.

And they share their vision of the money world of the future. They point out that programming has been transformed in the last decade, so that it’s easy today to integrate new technology into existing systems using software development kits, without the need for complex, expensive integrations. Why, they ask, can’t the world of banking and payments work like that? Why does it take three days for a global bank to move money? And what should a 21st century commerce system look like? Shamir and Angela think it should connect everyone on the planet; it should work over the internet; and it should enable anyone to build and ship applications on top of it, using standardized protocol libraries that developers can draw upon.

What we have today is broken. Many transactions get lost and can’t be followed. There is a lot of criminal activity that happens in the cracks. New financial rails will help regulators be able to see how money flows through the system.

Programmability, Sila says, will be the key to 21st century money.

A  note to listeners:  when the COVID pandemic hit, we shifted our focus on Barefoot Innovation to our special series on the future of regulation (more of those are coming). One result was that we had a few older shows recorded that were delayed in getting posted. This is one of those -- Shamir and Angela and I sat down for this conversation face to face, at a conference in California, months ago.

I know you’ll agree, it was worth the wait!

Links

• Transcript

• Book - Sapiens, A Brief History of Humankind

• Sila Website

More on Shamir

A true FinTech pioneer, Shamir Karkal played a crucial part in building the infrastructure that would pave the way for online banking. In 2009, he co-founded Simple, the first bank of its kind in the United States, and later headed the Open Platform at BBVA.

Shamir was drawn to serve smaller companies, co-founding Sila in 2018 with the goal of empowering financial innovations.

Shamir studied physics and computer science at Bangalore University and is a graduate of Carnegie Mellon’s Tepper School of Business. He lives with his family in Portland, Oregon, and enjoys jiu-jitsu, long-range target shooting, and studying history whenever possible.

More for our Listeners 

Please follow AIR on LinkedIn and Twitter, and also follow me personally on Twitter @JoAnnBarefoot. And please be sure to leave us a five-star rating on your favorite podcast platform.

I am very excited to announce that my upcoming guests include Scott Cook, Founder of Intuit, Renaud Laplanche, Co-founder and CEO of Upgrade, Linda Lacewell, Superintendent of the New York State Department of Financial Services, and Rebecca Romero Rainey, CEO of the Independent Community Bankers of America.

I am excited to see the fall events schedule shape up! I will be speaking at many virtual conferences, including FS Vector RAFT, LendIt Fintech, Finovate Digital,  Summit on Making Finance Work for Women, Fintech South 2020, A-Team Regtech Summit, as well as the Singapore Fintech Festival and Fintech Abu Dhabi.

The final judging for the G-20 Global Techsprint is coming in October, for which I am serving as a judge on Digital Regulatory Reporting. You can find more information on this here.

If you have not already had a chance, please make sure to comment on our Regtech Manifesto: Redesigning Financial Regulation for the Digital Age. We have already received many thoughtful comments and would love to hear more about what people are thinking.

Support our Podcast

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

A New World For Broker-Dealers: FINRA’S Haimera Workie

One benefit of my work is that I get to spend time with the innovators who are reshaping regulatory agencies all over the world. I have my favorites, and one of those is today’s guest. He is Haime Workie, who leads the innovation team at FINRA.

For listeners outside the US, FINRA is the Financial Industry Regulatory Authority, a self-regulatory body that oversees the broker-dealer industry in conjunction with the Securities and Exchange Commission. I have the pleasure of serving on FINRA’s FinTech Advisory Committee, which has been an invaluable learning experience for me.

FINRA’s Office of innovation was formally started last year, building on very extensive earlier work. It explores how technology is changing broker-dealers and how FINRA should respond to both new opportunities and risks, in order to assure investor protection and market integrity.

Other regulators will be interested to hear Haime describe how his office is structured, the size and skills of the staff, and how it interrelates with the larger organization. He describes the committee I serve on -- its membership profile and how FINRA puts it to use. He also explains how the innovation work feeds into new procedures, training, and investor education.

Haime’s office puts out white papers, which we’ll link to in the show notes, and I want to call your attention to a new one on how broker dealers are using AI today -- it is a fascinating read. Our conversation also explores some of the cutting edge innovations in the market, including fractional share investment and digital assets.

FINRA has a tradition of running “buildathons,” which are like hackathons or regulatory tech sprints. As regular listeners know, I’m a strong advocate for regulators adapting these kinds of innovations from the tech world, to accelerate their own learning and problem-solving. Haime tells us about the one they ran last year with MIT students, focusing on financial inclusion and investor protection.  (Haime himself is a graduate of both MIT and Harvard Law School, as part of a fascinating life journey that began in Ethiopia.)

The FINRA innovation program also benefits from the organization’s overall commitment to being data-driven. A separate data science team is a leader among US regulators in using cloud computing and AI to monitor the marketplace for aberrations and signs of potential misconduct. We’ll plan to do a podcast with them as well. 

In this show, Haime also gives us a tantalizing glimpse of what may be ahead: a digital, machine-readable rule book.

Links

• Transcript

• FINRA:  https://www.finra.org/fintech

• FINRA AI Whitepaper:  https://www.finra.org/sites/default/files/2020-06/ai-report-061020.pdf

• FINRA AI Blog:  https://www.finra.org/media-center/blog/artificial-intelligence-a-new-old-trend-transforming-financial-services

• Buildathon Podcast:  https://www.finra.org/media-center/finra-unscripted/the-buildathon

• Buildathon Blog:  https://www.finra.org/media-center/blog/voices-buildathon

More on Haime

Haimera Workie is the Head of Financial Innovation and Senior Director at FINRA. He is responsible for leading FINRA’s Office of Financial Innovation, which focuses on analyzing financial technology (FinTech) innovations and emerging risks and trends related to the securities market. As part of these responsibilities, he works to foster an ongoing dialogue with market participants in order to build a better understanding of FinTech innovations and their impact on the securities markets.  

Previously, Haime served as Deputy Associate Director in the Division of Trading and Markets at the U.S. Securities and Exchange Commission. He was also Counsel at the SEC Office of the Chairman. Prior to joining the SEC, he was an associate at the law firm of Skadden, Arps, Slate, Meagher & Flom, with a practice focusing on corporate law. He is a graduate of the

Massachusetts Institute of Technology (B.S., M.S.) and Harvard Law School (J.D.).

More for our Listeners

Follow AIR on LinkedIn and Twitter, and follow me on Twitter @JoAnnBarefoot. And please be sure to leave us a five-star rating on your favorite podcast platform.

Our special series on how the pandemic may impact the Future of Financial Regulation has  been full of great discussions. You can listen to all of these episodes here. Coming soon in the series will be conversations with FHFA Director Mark Calabria and with one of the top innovation leaders in Congress, Representative Patrick McHenry. We’ll also have episodes with Sila cofounders Shamir Karkal and Angela Wilson, and with Intuit founder Scott Cook.

Because we are living in a virtual world, many of my recent speaking events were recorded and can be watched by all:

• LendIt Fintech Digital; a talk that discusses building a post-pandemic financial system and how the role of fintech will change moving forward.

• Emerge Live; a panel to discuss the aftermath of COVID-19 and how we can move toward finhealth solutions to help small businesses.

• Finovate Asia Digital; a panel session that discusses the priorities and concerns in regulating fintech.

• Global Fintech Fest; a trialogue discussion on FinTech, RegTech, and SupTech and what they mean for financial supervision.

• Treasury Summit: New Rules; a friendly discussion about the Digital Dollar and whether or not it is time for a fundamental change to the U.S. currency.

• The Future of Business Post COVID-19; a panel discussion with the Provoke Management team about how businesses will adapt to the emerging “new normal” and what they miss most that does not seem to exist in the world today. 

Meanwhile, join me next week, August 11th at 6:00pm ET, for a discussion with The RegTech Association on RegTech Global Perspectives. I will also be speaking this fall at LendIt Fintech, Finovate Digital, and the Summit on Making Finance Work for Women, as well as the Singapore Fintech Festival. 

I am looking forward to the interim base touch virtually gathering with the finalists for the G-20 Global Techsprint, for which I am serving as a judge on Digital Regulatory Reporting.

Last but not least, AIR has released our Regtech Manifesto: Redesigning Financial Regulation for the Digital Age. It is a request for comments, so please join us in this fascinating dialogue!

Support our Podcast

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

After the Pandemic: The Future of Financial Regulation with NCUA Chairman Rodney Hood

The triple crises of 2020 -- pandemic, economic contraction, and racial and social upheaval -- are opening up new kinds of conversations. Today’s episode is one of these -- my discussion with Rodney Hood, the Chairman of the National Credit Union Administration. 

Chairman Hood is the first African-American, ever, to head a US federal financial regulatory agency -- and one of only eight to hold presidentially-appointed roles in these agencies since the New Deal.  As we continue our Barefoot Innovation special series on financial regulation after the pandemic, we focus closely on the challenges of racial disparity in the financial system, and what to do about them. 

Chairman Hood has written two op-eds since the death of George Floyd, one in the Wall Street Journal and one in Credit Union Journal that cites financial inclusion as the civil rights issue of our time. Today’s show includes a far-ranging overview of the changes needed in our system and many promising initiatives underway, by credit unions, minority-owned financial institutions, and others. Those include the recent decision by Netflix to deposit $100 million in black-owned banks. 

Our conversation also includes an update on how the NCUA is operating in the pandemic, and a thorough overview of the state of America’s 5,000-plus credit unions in the crisis thus far, with insights about the challenges the Chairman sees for them ahead. 

It also offers a heartening glimpse into the rising, close collaboration among the leaders of our regulatory agencies. The United States has a uniquely complex regulatory structure that creates challenges when our various agencies need to work in concert, and need to move quickly. As Chairman Hood makes clear, they see this need acutely as the nation grapples with our compound crises. It’s a trend that bodes well for future interagency collaboration as technology continues to rev up the velocity of change in the financial system. 

Links

• Transcript

• National Credit Union Administration

• Chairman Hood’s LinkedIn

• 2019 Annual Report to Congress on Preserving Minority Depository Institutions

• Hope Credit Union

• World Council of Credit Unions

• Chairman Hood's Credit Union Journal Op/Ed

• Financial inclusion is ‘civil rights issue of our generation’: National Credit Union Administration Chairman

• Chairman Hood’s Wall Street Journal Op/Ed

More on Rodney Hood

President Donald Trump nominated Rodney E. Hood for the NCUA Board on January 19, 2019 and the U.S. Senate confirmed him on March 14, 2019. He took the oath of office on April 8, 2019, and was designated as the eleventh NCUA Chairman by President Trump. 

As NCUA Board Chairman, Mr. Hood serves as a voting member of the Financial Stability Oversight Council. He also represents the NCUA on the Federal Financial Institutions Examination Council and the Financial, Banking Information Infrastructure Committee. 

Mr. Hood was previously nominated to the NCUA Board by President George W. Bush and served from November 2005 until August 2009. He was appointed Vice Chairman by then- NCUA Board Chairman JoAnn Johnson and served as the NCUA’s representative on the board of directors of NeighborWorks America. 

Immediately prior to rejoining the NCUA Board, Mr. Hood was a corporate responsibility manager for JPMorgan Chase, managing national partnerships with non-profit organizations promoting financial inclusion and shared prosperity in underserved communities throughout the United States. 

His previous experience includes serving as associate administrator of the Rural Housing Service at the U.S. Department of Agriculture. In this position, he worked to address the housing needs in rural communities and helped administer the agency’s $43 billion mortgage portfolio. 

Prior to his public service, Mr. Hood was the marketing director and group sales manager for North Carolina Mutual Life Insurance Company, national director of the Emerging Markets Group for Wells Fargo Home Mortgage, and served on the board of the Wells Fargo Housing Foundation. He has served as a member of the Board of Governors for the University of North Carolina College System. 

Mr. Hood holds a bachelor’s degree in business, communications, and political science from the University of North Carolina at Chapel Hill. 

More for our listeners

Our special podcast series has heard so far from current leaders helming major regulatory agencies -- Brian Brooks, Jelena Mc Williams, and Chris Woolard -- as well as former agency heads like Thomas Curry and Eugene Ludwig. Stay tuned to see where the next show brings us!

Please, everyone, stay safe.

Support our Podcast

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

Crypto Innovation: Wyoming Banking Commission Albert Forkner

One evening last October, I was pushing my way through the throngs of people at Money 2020 in Las Vegas, when someone called out my name. I turned and saw today’s guest -- Albert Forkner. He is the Banking Commissioner of the State of Wyoming, and our conversation led to this podcast, because he is doing one of the most innovative regulatory experiments in the United States -- or maybe anywhere.

We recorded this conversation months ago and were delayed in posting it by the Coronavirus, which has upended so many plans. However, the delay does not diminish the fascinating developments in Wyoming.

In the US, we have a dual banking system, with some banks chartered and regulated by the federal government, and some by the states. Some of our states, like California and New York, have economies that are larger than those of many countries. Others are small. 

The state of Wyoming, in the mountain West, is geographically huge, with mountains and wide-open prairies and mining and lots of cattle and Yellowstone National Park. In population, though, it’s small -- fewer than 600,000 people.

As recently as 2018, Wyoming had a traditional community banking system serving that population. It has no large banks. It’s not a money center. Its bank regulatory challenges were the traditional ones faced by small banks serving markets that are dominated by two big, cyclical industries, namely agriculture and energy.

That was then.

Today, Wyoming is the leading state in the country in attracting new types of companies centered on cryptocurrency and crypto assets.

In our conversation, Albert tells the story of the transformation, which has only just begun. He explains the motivation -- the potential to grow into a financial hub in crypto, in much the way South Dakota became a center of the credit card industry a few decades back, by creating a welcoming regulatory environment. He explains the types of companies they are attracting, and how, and how they plan to oversee them. 

Our talk is a window into a regulatory world that few people on the coasts ever see. Wyoming has a citizen legislature that meets for only 20-40 days per year -- the legislators all have “day jobs” the rest of the time, such as being business people, or ranchers. The state banking department has a full-time equivalent of seventeen people. And yet, in just over a year the legislature and regulators have retooled their laws, gathered expert legal and financial insight from all over the planet, and stood up a whole new strategy based on the cutting edge of change in the world of money. It has attracted interest from all over the world, ranging from regulators and crypto companies in Europe and Asia, to all the US regulatory bodies, to the FBI.

Albert shares his thoughts on all this -- his own background, as a lifelong regulator, what they are doing, why, how they are going about it, what he worries about, how they use their regulatory sandbox, what they are doing to accelerate their own learning, what they have done to attract new skillsets into their work, and much more.

I know you will enjoy my fascinating conversation with Albert Forkner.

Links

• Wyoming Special Purpose Depository Institutions

More on Albert

Albert Forkner was appointed to head the Wyoming Division of Banking as State Banking Commissioner in 2012. In this role he is responsible for the supervision and regulation of all state-chartered banks, independent trust companies, licensed non-depository financial entities operating, and the newly created blockchain/crypto-friendly Special Purpose Depository Institution in Wyoming.

Mr. Forkner has over 21 years with the Wyoming Division of Banking. Prior to serving as commissioner, he was the deputy banking commissioner, a position he held for four years. His experience also includes chief examiner and senior bank examiner at the Division, and a commercial and real estate loan officer.  He served as the chairman of the board of directors for the Conference of State Bank Supervisors during 2017-18.  

Mr. Forkner received a Bachelor of Science Degree in Economics from the University of Wyoming and he is a graduate of Cannon Financial Institute and the Graduate School of Banking at Colorado.

More for our Listeners

Remember to leave our show a five-star rating on your favorite podcast platform and to follow me on Twitter and LinkedIn.

We recently posted new episodes in our special series on how the pandemic may impact the Future of Financial Regulation, one with FDIC Chairman Jelena McWilliams and one with Christopher Woolard, Interim CEO of the Financial Conduct Authority. We will have a new episode coming up soon with Rodney Hood, the Chairman of the National Credit Union Administration. And don’t miss the show we posted with Acting Comptroller of the Currency Brian Brooks, on his first day on the job.

I recently spoke at Emerge Live in a panel to discuss the aftermath of COVID-19 and how we can move toward finhealth solutions to help small businesses. You can watch it here. Don’t forget that LendIt Fintech in New York has been rescheduled for the end of September and I am looking forward to speaking there as well. Later in the year I’ll be at Money 2020 and the Singapore Fintech Festival, one way or the other. And in July, I’ll be participating in the base touch program on the finalists for the G-20 Global Techsprint, for which I will be a judge.

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

After the Pandemic: The Future of Financial Regulation with UK Financial Conduct Authority Interim CEO Christopher Woolard

Today’s episode of our special series on the future of regulation after the pandemic takes us across the Atlantic (virtually) to talk with one of my favorite Barefoot Innovation guests. He is Christopher Woolard, the interim CEO of the UK Financial Conduct Authority.

Chris has made two prior appearances with us, here and here. Before assuming the lead role at the FCA, he has been, for years, a primary architect of the agency’s innovation initiatives, including its unique regtech program -- which I consider to be clearly the best in the world.  

In our conversation, Chris talks about the opportunity to come out of this crisis and “build back better.” He discusses how the FCA has converted to the work-from-home environment and what adjustments may last beyond the crisis. He shares the worry that the economic downturn will follow the common crisis pattern of strengthening large incumbent firms at the expense of smaller ones, and how to avoid wiping out a decade of innovation. He talks about impacts on vulnerable consumers and on the UK’s fabled fintech sector and describes the government’s efforts to build a bridge over the crisis and get as many people across it safely, as possible. 

I also asked about the FCA’s innovation program, headed by Nick Cook. Chris describes the fortunate timing of the FCA having just finished embedding data scientists in every one of its units, right before the pandemic hit and sent everyone home. He gives an update on their famous regulatory sandbox program, which is breaking records. And on regtech, he explains that the agency has two enormous initiatives underway, one on financial crime and one on digital regulatory reporting. The latter has the potential to save literally billions of pounds in the UK and is, in my view, a model that will be widely adopted -- and will completely reshape the regulatory landscape.

Let me mention that we at AIR are about to put out a paper we call the Regtech Manifesto, which explores that future.

As Chris says, the crisis has brought the future forward. 

Links

• Transcript

• FCA

• FCA LinkedIn

• FCA Twitter

• Chris’s LinkedIn

More for our Listeners

I hope you enjoyed today’s show. Watch for our upcoming episodes, including one with Albert Forkner, the innovative banking commissioner of Wyoming, and one with Haime Workie, who leads innovation at FINRA. 

Meanwhile, please stay safe.

More on Chris

Prior to being appointed Interim Chief Executive, Christopher was the FCA’s Executive Director of Strategy and Competition and a member of the FCA’s board. Before joining the FCA in January 2013, Christopher held senior roles at Ofcom, the BBC, and in the civil service. He is a Sloan Fellow of London Business School.

Christopher is also a member of the Prudential Regulation Committee and the Financial Policy Committee.

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After the Pandemic: The Future of Financial Regulation with FDIC Chairman Jelena McWilliams

Today in our special series on financial regulation in the pandemic and beyond, we are honored to have with us the Chairman of the Federal Deposit Insurance Corporation, Jelena Mc Williams.

In this conversation, the Chairman shares far ranging insights and updates. She talks about the readiness of today’s banking system for crisis, She talks about how this crisis differs from the last one, and needs a different response. She talks about the sectors and regions most impacted. And she discusses strategies for helping low and moderate income bank customers -- the people who are most vulnerable to both the health and financial disruptions underway. These include ideas on an interagency initiative on small dollar lending and on adapting Community Reinvestment Act to meet this moment. 

The Chairman also opens a fascinating window into how the FDIC is conducting off site examinations in the crisis, and especially into the impressive speed with which community banks are adopting the technology needed to handle high-tech flows of information. Despite the terrible impacts of the pandemic, she is hopeful -- as am I -- that we will be able to find some silver linings in how these unprecedented challenges are accelerating technology adoption, by banks and regulators alike, and laying the groundwork for a better financial system.

The Chairman was a guest on Barefoot Innovation late last year. In that episode, she talked in more depth about her own history, including her coming to the United States from the former Yugoslavia and learning firsthand what it is to struggle with lack of money. That longer show is here and is well worth listening to. It explains why the Wall Street Journal once ran an op ed saying this is one of America’s “most inspiring bureaucrats.”

We launched this special series in the midst of the COVID crisis. Since we ran our last interview, a new crisis has swept the country in response to the tragic death of George Floyd. Convulsive shifts are prompting all of us to examine old assumptions and to think anew about how we can do better, together.

I know you’ll be fascinated by my conversation with FDIC Chairman Jelena Mc Williams.

More for our listeners

Our special podcast series has heard so far from current and former US agency heads -- Thomas Curry, Eugene Ludwig, Brian Brooks and Jelena Mc Williams. Up next will be a leading regulator from across the Atlantic -- the interim head of the UK Financial Conduct Authority (and another previous guest on the show) Christopher Woolard.

Please, everyone, stay safe.

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

The First Fintech Comptroller: Acting Comptroller of the Currency Brian Brooks on His First Day in Office

This morning, Brian Brooks is starting his new job as acting Comptroller of the Currency. I’m fortunate to know Brian well, and over the years he and I have spent many hours talking about all the themes that we explore here on Barefoot Innovation. As he takes on his new role, I’m delighted that we were able to sit down together (virtually) and share some of that conversation with you.

Brian came to the OCC from Coinbase. That makes him, in effect, the first fintech Comptroller of the Currency. Before Coinbase he was general counsel of Fannie Mae. Those are two very different kinds of companies, and in today’s show, he tells a story I didn’t know about how he got interested in fintech while he was at Fannie Mae. As you will hear, he has a clear and compelling vision for how technology will, and should, change both financial regulation and banking.

When Brian decided to go to the OCC, he had no way to know that he would be taking its helm amidst an all-out, historically-unprecedented economic crisis. I asked him how he thinks this pandemic will impact bank regulation, short and long term, and I also asked what he hopes to achieve in his role, above and beyond the crisis work.

The common denominator that I hear running through all his plans is technology innovation, both in the national banking system and at the OCC. Our talk ranges from new charters to clarifying powers of national banks, to third party risk management, to the digital dollar, to a project for reviewing every line of OCC rules and guidance to weed out references to old technology like fax machines. 

We also cover financial inclusion. He has plans for a further round of rulemaking on the Community Reinvestment Act. He also has ideas for enabling more inclusive loan underwriting by using new data and AI, and he talks about how doing so would require clear regulatory rules of the road on how to prevent illegal disparate impact. My own view is that solving that issue, all by itself, could become the biggest regulatory driver of financial inclusion in memory.

For the OCC internally, Brian also has ambitious plans for innovation in the financial regulatory process itself. They include a bigger role for the Office of Innovation, a shift onto a single supervisory platform, and a clear vision for how technology should, and shouldn’t, change the lives of the OCC’s incredibly talented people. 

Our listeners know I’m a former Deputy Comptroller of the Currency. It was exciting to see Brian’s commitment to the traditional strengths of the OCC and the national banking system, and to see the possibilities of building on them with new technology. As I listened to him talk, I could imagine a future in which banking and fintech flow together more, to the benefit of each other, and to the great benefit of their customers in the Digital Age.

At the end of our discussion, I asked Brian to talk about something that I know about him, but that most listeners don’t. I’ll just say, it has to do with music.

Links

• Transcript

• OCC Website

• Our prior podcast with Brian

More on Brian Brooks

Brian P. Brooks is the Acting Comptroller of the Currency.

He came into this role upon the resignation of the 31st Comptroller of the Currency Joseph M. Otting, due to Mr. Brooks’ designation as First Deputy Comptroller by Treasury Secretary Steven T. Mnuchin pursuant to his authority under 12 USC § 4.

As Acting Comptroller of the Currency, Mr. Brooks is the administrator of the federal banking system and chief officer of the Office of the Comptroller of the Currency (OCC). The OCC supervises nearly 1,200 national banks, federal savings associations, and federal branches and agencies of foreign banks that conduct approximately 70% of all banking business in the United States. The mission of the OCC is to ensure that national banks and federal savings associations operate in a safe and sound manner, provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations.

The Comptroller also serves as a director of the Federal Deposit Insurance Corporation and a member of the Financial Stability Oversight Council and the Federal Financial Institutions Examination Council.

Prior to becoming Acting Comptroller, Mr. Brooks served as Senior Deputy Comptroller and Chief Operating Officer. In this role, he oversaw OCC bank supervision, bank supervision policy, economics, supervisory system and analytical support, systemic risk identification support and specialty supervision, and innovation. He also served as a member of the OCC's Executive Committee and was the Chair of the Technology and Systems Subcommittee, since joining the agency in April 2020.

Prior to joining the OCC, Mr. Brooks served as Chief Legal Officer of Coinbase Global, Inc. He headed the legal, compliance, audit, investigations, and government relations functions for the company, which served 20 million customers. He held this position since September 2018.

From 2014-2018, Mr. Brooks served as Executive Vice President, General Counsel, and Corporate Secretary of the $3.2 trillion Fannie Mae. He was previously a Vice Chairman of OneWest Bank, N.A., from 2011 to 2014. Before OneWest, he was managing partner of the Washington, D.C. office of the global law firm O'Melveny & Myers LLP, where he also served as chair of the firm's financial services practice group.

Prior to joining the OCC, Mr. Brooks also served on the Boards of Directors of Avant, Inc. and Fannie Mae, and also served as an advisor to a number of technology startups.

Mr. Brooks holds a bachelor’s degree in government from Harvard University and a law degree from the University of Chicago.

More for our Listeners. 

Don’t forget to follow me on Twitter and LinkedIn.

If you haven’t already done so, listen to my talks with two former Comptrollers of the Currency, Thomas Curry and Eugene Ludwig, in our special series on how the pandemic may impact the Future of Financial Regulation. We also have conversations coming up in the series with Christopher Woolard, interim CEO of the UK Financial Conduct Authority and Jelena McWilliams, Chairman of the FDIC.

The conference schedule is coming back to life through a combination of virtual events and live ones scheduled for fall. I will be speaking at Emerge Live on June 22nd in a panel to discuss the aftermath of COVID-19 and how we can move toward finhealth solutions to help small businesses. Also coming up on July 10th is Finovate Asia, where I will moderate a panel on priorities and concerns in regulating fintech. It is so great to see that technology has allowed these conferences to continue, even if it is virtual. I’m also looking forward to speaking soon to an internal event of the Bermuda Monetary Authority.

LendIt Fintech in New York has been rescheduled for the end of September and I am looking forward to speaking there as well. Later in the year I’ll be at Money 2020 and the Singapore Fintech Festival, one way or the other. And in July, I’ll be participating in the base touch program on the finalists for the G-20 Global Techsprint, for which I will be a judge.

One more note: I had virtual conference events this week in the US, Africa and Asia. At all of them, there was a palpable sense that this pandemic, for all its terrible impacts, is having the positive effect of accelerating digitization in both finance and financial regulation. I have no doubt about it. This world is going to change.

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

Calling All Innovators: Andrew McCormack of BIS on the First G20 Global Regulatory Techsprint -- Deadline May 27

Today’s show is both a fascinating story and a call to action. We’re posting it as a bonus episode because my guest, Andrew McCormack of the Bank for International Settlements, is sharing an invitation to innovators throughout the world to apply to compete in the G20’s global TechSprint -- and entries are due in just two weeks!

Our regular listeners know I’m an advocate for the regulatory TechSprint concept, which was invented by the UK Financial Conduct Authority as a method of innovation created by regulators, for regulators. The FCA took a problem-solving tool that is ubiquitous in the tech world -- the hackathon -- and adapted it to the needs and practical constraints of financial regulatory bodies. A sprint brings together regulatory and financial experts with software engineers and designers, and has them build technology solutions for intractable regulatory challenges. (Let me note that the FCA has issued a guide to conducting TechSprints, and also that we at AIR will soon release a practical manual on how to organize one.)

Andrew, who is the Centre Head of the BIS Innovation Hub in Singapore, explains that this new initiative builds on the FCA’s work. The new sprint is backed by a stellar set of global partners, including the G-20, the Bank for International Settlements, the Monetary Authority of Singapore, and the Regtech for Regulators Accelerator. I’ll let Andrew tell you about you who all the organizers are, what they’re doing, and why. He will also share the three problem statements that the sprint will solve for, distilled from input offered by regulators throughout the world. 

This G20 TechSprint is a fully global competition. Innovators from all over the world can apply to join in it.  And regulators from throughout the world will participate in a summer session to learn from the work underway by the competing teams and to help shape the evolving solutions. 

Winners in each of the three categories will receive a $50,000 cash prize as well as recognition at the Singapore Fintech Festival late this year. And I’m delighted to say that I have been asked to serve as a judge in the competition.

In our conversation, Andrew explains that the application deadline was extended this week from May 20 to May 27 -- but he warns that there will be limited slots and advises against waiting to the last minute! I hope we have many Barefoot Innovation listeners who will sign up to solve these enormous problems.

And if you are a regulator interested in attending the July Virtual workshop, please contact the BIS at TechSprint@bisih.org.

The COVID-19 pandemic is spotlighting the need for modernized technology in governments everywhere, including for financial regulation. Regulators need better data, and they need better, more powerful, more flexible tools. I think the G20 TechSprint can be a breakthrough for them, opening a path toward a vastly stronger system.

So, please, apply now to compete!

Links

• Transcript of episode

• Press release when Andrew was appointed: https://www.bis.org/press/p200219.htm

• The Financial Stability Board

• The Singapore API Exchange (APIX)

More on Andrew

Andrew joined the BIS in April 2020 as the Centre Head of the Singapore Innovation Hub. Prior to the BIS, Andrew was Chief Information Officer & VP of Payment at Payments where he was responsible for technology strategy and payment system operations. Under his leadership, Payments Canada embraced cloud technology, launched API services and led the ground-breaking blockchain research (a.k.a Project Jasper) alongside the Bank of Canada.  Andrew has an MBA from the Ivey Business School and Bachelor of Computer Science from Carleton University.

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

After the Pandemic: The Future of Financial Regulation with former Comptroller of the Currency Eugene Ludwig

Welcome to the second in our series of special conversations about how the pandemic may change the shape of financial regulation. Last time we talked with former Comptroller of the Currency Thomas Curry. Today, my guest is another former Comptroller, and now the CEO and Founder of Promontory Financial Group, Eugene Ludwig. 

Gene Ludwig has been a household name in the financial regulatory realm for decades, and it was wonderful to be able to tap into his thinking about how this unprecedented crisis may change that world. He shares his insights about likely impacts for various sectors, for community banks, and for the government’s efforts thus far to provide rescue assistance. 

Our listeners will be especially interested in Gene’s thinking about how the crisis will reshape the technology of bank regulation. He foresees accelerating changes in how to conduct examinations, movement toward more shared utilities and third-party providers, and use of new kinds of data, combined with artificial intelligence and machine learning to leverage it. We also talked about the likely impact of all this change on privacy law and regulation. 

Let me note that regulatory technology transformation is the subject of our Regtech Manifesto, being issued soon by AIR as a Request for Comment. Please watch for that!

As risks rise in the economy, it’s worth remembering that banks did not cause this crisis, and that they are in fact working hard to help their customers weather it. Nevertheless, Gene draws on his long experience to predict a likely arc of regulatory evolution for the short, medium and long term, which will generate a great deal of impact on banks. And he shares some advice for his successors who are now leading our regulatory agencies. 

A note to innovators on techsprint competition

Speaking of how regulation may change, I want to share some major news. The G20 and the Bank for International Settlements have launched the first-ever global techsprint, seeking technology solutions for major challenges that face financial regulators throughout the world. They have created three powerful problem statements and are offering a cash prize of $50,000. I will be serving as a judge. The deadline for submitting applications to participate is very soon -- May 20. Here are the details.

Links

• Transcript

• Twitter @PromontoryFG

• Promontory LinkedIn

More on Gene Ludwig

Gene is the founder and chief executive officer of Promontory Financial Group and is a trusted adviser to many of the world's leading financial companies. He is widely recognized as a farsighted thinker on the most pressing issues confronting financial services. Before founding Promontory, Gene served under President Clinton as U.S. Comptroller of the Currency, the head of the federal agency responsible for supervising the preponderance of U.S. banking assets. He went on to become vice chairman and senior control officer of Bankers Trust/Deutsche Bank.

Link to full bio

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

After the Pandemic: The Future of Financial Regulation with former Comptroller of the Currency Thomas Curry

The ripple effects of the COVID-19 pandemic are radiating through our lives, coming with wave after wave of impact. We are gradually awakening to a sense of how profound some of these changes may become, especially as secondary and tertiary effects cascade through the system.

The financial industry is at the heart of much of the needed rescue effort. It is also likely to face escalating, novel risks as the economy hits a convulsive contraction.

This realization has inspired us to run a special series of podcasts on how the pandemic may change financial regulation. We’ll be talking with some of the most thoughtful people in the space, including veterans of past crises and, especially, former heads of regulatory agencies.

Today’s show is the first in that series. My guest is Thomas J. Curry, who served as the US Comptroller of the Currency from 2012 to 2017. For listeners outside the United States, the Office of Comptroller of the Currency, or OCC, is the US regulator of nationally-chartered banks.

Tom has served for decades as a leading regulator at both the state and federal levels. He was the Commissioner of Banks for the Commonwealth of Massachusetts under five different governors, and later was a presidentially-appointed member of the board of the Federal Deposit Insurance Corporation. He is now a partner at the Nutter law firm in Boston and, among other things, chairs the Milken Institute’s Fintech Advisory Committee, on which I am privileged to serve as well. Go to the show notes for more information on his very distinguished career

I’m delighted to say that Tom also serves on the board of directors of my nonprofit, the Alliance for Innovative Regulation. My colleagues and I at AIR watched the pandemic morphing from a health crisis into an economic crisis and realized we could help governments and financial companies that were scrambling to scale up the mechanisms needed to rescue small businesses and people unemployed in the crisis. We are running several initiatives, including a series of hackathons and issuance of a Request for Comment on a while paper we call a Regtech Manifesto. I’ll share more on our efforts in another episode in hopes of sparking further ideas and engagement.

The Future of Regulation episodes are shorter than our normal shows. We’ll be posting them quickly to try to match the breathtaking pace of this dynamic environment, in which nothing stays stable from week to week, or even day to day. Our next guest will be another thoughtful former Comptroller of the Currency, Eugene Ludwig.

Links

• Tom’s Full Bio

• Our prior interview with Tom on this podcast

More on Tom Curry

Thomas J. Curry is a partner in Nutter’s Corporate and Transactions Department and a co-leader of the firm’s Banking and Financial Services group. He is a regulatory attorney who advises clients on a wide range of policy, financial services regulation, governance, and other issues. He chairs the Milken Institute’s Fintech Advisory Committee and is a foundation board member of the newly launched initiative Alliance for Innovative Regulation (AIR), which will help regulators integrate technology into every stratum. Prior to joining Nutter, Tom served as the U.S. Comptroller of the Currency until May 2017. He most recently served as an expert consultant for the International Monetary Fund. 

In 2012, Tom was nominated by President Obama and confirmed by the U.S. Senate to serve as Comptroller of the Currency – the head of the Office of the Comptroller of the Currency, the federal agency that charters, regulates, and supervises national banks and federal savings banks. As Comptroller, Tom served as an ex-officio member of the Board of Directors of the Federal Deposit Insurance Corporation and the Financial Stability Oversight Council. He was also a member of the Group of Governors and Heads of Supervision (GHOS), the oversight body of the Basel Committee on Banking Supervision. 

Tom also served as Chairman of the Federal Financial Institutions Examination Council (FFIEC) for a two-year term from April 2013 until April 2015. 

Before becoming Comptroller in 2012, Tom served as a member of the Board of Directors of the FDIC. He was nominated by President George W. Bush and confirmed by the U.S. Senate in 2003. He continued to serve on the FDIC Board until May 2017. 

Prior to joining the FDIC’s Board of Directors, Tom served five Massachusetts Governors as the Commonwealth’s Commissioner of Banks from 1995 to 2003 and from 1990 to 1991. He was appointed by Governor William F. Weld, a Republican, in 1995 and by Governor Michael S. Dukakis, a Democrat, in 1990.

Tom served as the Chairman of the Conference of State Bank Supervisors from 2000 to 2001, and served two terms on the State Liaison Committee of the FFIEC, including a term as Committee chairman. 

Previously, Tom served as Acting Commissioner of Banks from February 1994 to June 1995. He previously served as First Deputy Commissioner and Assistant General Counsel within the Massachusetts Division of Banks. Tom entered state government in 1982 as an attorney with the Massachusetts’ Secretary of State’s Office. 

Tom was a longtime member of the NeighborWorks America Board of Directors (NWA). He twice served as Chairman of the Board of Directors, most recently from March 2014 through June 2016. NWA is a Congressionally chartered non-profit whose mission is to support affordable housing and community development.

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

No Shortcuts - Varo CEO Colin Walsh on how to become a bank

Trailblazing is hard work. It is not easy to carve out a path no one has followed before, knowing where you want to go but not precisely how to get there. That is exactly what today’s guest has done. Colin Walsh is the CEO of Varo, and Varo is the first fintech startup to become chartered as a national bank.

We’ve had Colin on the show before. I first met him shortly before Varo launched, during the first fintech innovation conference held by a US federal regulatory agency -- that was at the Federal Reserve Bank of San Francisco in, I think, 2015.  When we recorded a Barefoot Innovation episode about a year later, Varo was a promising young firm dedicated to expanding financial inclusion and consumer financial health. And today, it is provisionally approved to be a national bank -- not with the special fintech charter that the OCC proposed several years ago, but with a regular charter like any other full service bank.

In our conversation, Colin explains what Varo does and who it serves -- he describes popular features like no-fee overdraft, early-pay, and auto-savings, and touts the company’s very high net promoter score. He explains why he thinks Varo’s business model is the best of both worlds, better than either a typical fintech or a typical bank. He talks about the advantages of building a bank today from scratch using the newest technology, including the ability to massively leverage data and to set up what may be the most modern tech stack of any bank in the United States, or even the world. 

And then Colin takes us along on Varo’s pathfinding journey from fintech startup to national bank. He describes the 5,000 page application they prepared and some lessons they learned, including how different the processes were for getting approvals from the OCC versus the FDIC. He offers advice for other fintechs that may want to travel the same route, sharing what it takes to get it done -- which is a lot.

I asked Colin to try to predict the future of the financial industry. I know you’ll be interested in his vision for it, as well as his advice for banks that, unlike Varo, are not starting from scratch. I was interested that he estimates Varo’s cost of serving a customer at about one-fourth the cost of a large bank. Those economics are going to reshape the industry in the coming years.

Last but not least, Colin has suggestions for the regulators, themselves, as they grapple with the industry redesign that is being wrought by technology, and as more fintechs seek to enter the banking system in one form or another. 

I was talking recently with a very smart person about how the pandemic may change the financial sector and financial regulation. He said the only thing he’s sure of is that, coming out of it, we won’t have “alternative” finance. We’ll just have finance. There is a great deal of work ahead to figure out how best to take the best of the old, and the best of the new, and fashion the best imaginable models for financial companies, to make them stable, inclusive, affordable, innovative, and fair.

Speaking of imagining the future, please also watch for a very special series of podcasts we’re creating on the post-pandemic future of financial regulation. Our first guest is former Comptroller of the Currency Thomas Curry, and our second will be former Comptroller of the Currency Gene Ludwig. Those are coming soon.

Links

• Transcript

• Colin Walsh Twitter

More on Colin

Colin Walsh is the CEO and co-founder of Varo Money, which has become the first chartered mobile-centric national bank in U.S. history. Colin founded Varo with a specific vision: to help millions of people improve their financial lives.

Colin is uniquely positioned to lead the mobile-bank revolution, having more than 25 years of experience in consumer banking at large global financial institutions in the US and Europe. He led Europe’s largest credit and charge card business as an Executive Vice President at American Express. He also led the UK’s largest mortgage and savings businesses at Lloyds Banking Group and served as Managing Director for the firm’s retail bancassurance, credit, debit and merchant acquiring businesses.

Under Colin’s leadership, Varo now has more than 1M customers who are building their financial health with services like No Fee Overdraft, early pay with direct deposit, and auto-savings tools with high APY. 

More for our Listeners

Please come to www.regulationinnovation.org to check out our new AIR website. Also please follow me on Twitter and LinkedIn.

We have great shows coming up. We’ll talk with Albert Forkner, State Banking Commissioner of Wyoming and with Sarah Willis of the Metlife Foundation and Allie Burns, CEO of the nonprofit Village Capital. And we’ll have a conversation with Shamir Karkal and Angela Wilson of Sila.  

And again, watch for our special series on how the pandemic may impact the Future of Financial Regulation, starting with former Comptroller of the Currency Thomas Curry.

I hope everyone is safe and healthy.

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

Homomorphic Encryption: Enveil CEO Ellison Anne Williams

Technology revolutions create dilemmas -- good things mixed with bad things. In the 21st century, the explosion of data and computing power makes it possible to do good, worthy things that, only a few years ago, were unimaginable. On the other hand, the explosion of data and computing power opens the door to problems and dangers that, only a few years ago, were also unimaginable. These include the danger of almost entirely losing our privacy, of having our personal lives exposed to commercial interests, to governmental powers, and to criminals. 

We know there is no easy solution to this. However, one of my guiding principles when looking at big, hard problems is always to ask if there could be technology remedies for them, before I assume that we need laws and regulations to tackle them -- partly since I know that regulatory strategies are never fully effective. 

And that brings us to today’s guest. She is Ellison Anne Williams, the CEO of Enveil. And she is an expert in the privacy technology known as homomorphic encryption.

Regulators throughout the world are looking at homomorphic encryption as one of several new kinds of technology that might enable much more widespread, but safe, sharing of information. The exciting potential is that data can be shared in encrypted form and then actually worked on, still in that form, without the need to decrypt at all. This means that if someone hacks into it, all they get is unusable, garbage information. They don’t get the information that needs to be kept secure.

This capability can offer a breakthrough for many regulatory challenges, but the need is especially acute in anti-money laundering. I met Ellison Anne because Enveil has been involved in the tech sprints run by the UK Financial Conduct Authority to look for better AML technology. Last summer, Enveil participated in the big tech sprint that the FCA held in London, and the company also sent people to join in the Washington satellite sprint that my nonprofit, AIR, held in collaboration with the British regulators. And it was on the winning teams at both.

As we have said many times on Barefoot Innovation, the current AML system is failing spectacularly. The UN estimates that we have worse than a 99% failure rate in detecting global financial crime, despite massive spending on the effort. One main reason for this is that the criminals and terrorists easily share information, while banks and law enforcement are severely limited in doing so. The reason for that, in turn, is that the non-criminals have to follow strict rules for protecting people’s privacy, which means that information about individuals’ financial lives cannot be widely circulated among financial companies, government agencies, or countries, without following cumbersome procedures to assure due process. This means that criminals can build sophisticated global networks that hide their movement of money, with very little risk that banks and law enforcement will be able to catch it because each sees only a small sliver of the picture.

But here’s the new tech breakthrough:  what if, in the early stage of searching for financial crime, we don’t need to share information about people with their identities attached? What if we only need to share information about patterns of anonymous transactions? Using machine learning, these patterns can be readily detected over huge volumes of pooled data. Many of them have clear characteristic typologies that indicate that illicit money is likely being hidden. Often, these patterns can even show what kind of crime may be underway, because human trafficking money flows look different from those for weapons or drugs or selling endangered wildlife.

The FCA invented a slogan for the two tech sprints it has held on financial crime. The watchword was:  “It takes a network to defeat a network.” Anyone who works closely with financial crime knows that the criminals will continue to win, until the forces of good can search holistically for these big global patterns of high-tech crime. Hence the emergence of a generation of “privacy-enhancing technologies,” or PET’s. These include zero-knowledge proof, differential privacy, and homomorphic encryption.

Ellison Anne and I sat down for this conversation during the Singapore Fintech Festival late last year, in the bustling speakers lounge, which means there is some background noise. Still, I know you’ll enjoy hearing from her as she explains that homomorphic encryption is 30 year old technology that has suddenly become practical because it requires intensive computing power, and that power is now becoming cheap and abundant. The speed of this shift is, inevitably, causing regulatory policy to lag somewhat behind. Now is the time for policymakers who care about financial crime, and who care about data security and privacy, to take a close look at these new tools. 

Are privacy-enhancing technologies a panacea? No. There are no panaceas. Could they massively improve our ability to work safely with data?  They have that potential.

Links

• Podcast Transcript

• Enveil on Twitter  

• Ellison Anne on Twitter  

• Enveil on LinkedIn  

• Enveil's Web Site

• Forbes - Compliance is the new normal, its time to lock down the data

• Enveil press release about tech sprint

• FCA 2019 AML Tech Sprint  

• TechSprint presentation

• BAE Blog - Data, Why it can be good to share 

More on Ellison Anne

Dr. Ellison Anne Williams is the Founder and CEO of Enveil, the pioneering data security company protecting Data in Use. Building on more than a decade of experience leading avant-garde efforts in the areas of large-scale analytics, information security, computer network exploitation, and network modeling, Ellison Anne founded the startup in 2016 to protect sensitive data while it's being used or processed – the 'holy grail' of data encryption. Powered by homomorphic encryption, Enveil’s award-winning ZeroReveal® solutions provide Trusted Compute in Untrusted Locations™, enabling previously impossible business functionalities for intelligence-led decision making.

Leveraging her deep technical background and a passion for evangelizing the impact of disruptive technologies, Ellison Anne has helped define and advance the Data in Use security space and cultivated Enveil’s capabilities into category-defining solutions that enable secure search, analytics, sharing, and collaboration. In addition to her ongoing contributions as a cybersecurity mentor, speaker, and thought leader, Ellison Anne has been recognized as an SC Media Reboot Leadership Innovator Award winner, a Woman to Watch in Security, and a Cyberscoop Leet List Honoree, 

Under Ellison Anne’s leadership, Enveil has been recognized with a number of awards including: SC Award Winner “Best Cloud Computing Security Solution”, SINET 16 Innovator, Cybersecurity Breakthrough Awards “Overall Encryption Solution of the Year”, Maryland Cybersecurity Awards “Cybersecurity Innovator of the Year”, Cybersecurity Impact Award Winner, FCA TechSprint Winner, and RegTech 100. Just four months after founding the company, Ellison Anne presented the company’s groundbreaking technology at the 2017 RSAC Innovation Sandbox, becoming the youngest company ever selected to participate in the esteemed competition, and was ultimately recognized as one of the winners. 

Ellison Anne started her career at the U.S. National Security Agency and the Johns Hopkins University Applied Physics Laboratory and is accomplished in the fields of distributed computing and algorithms, cryptographic applications, graph theory, combinatorics, machine learning, and data mining. Ellison Anne holds a Ph.D. in Mathematics (Algebraic Combinatorics), a M.S. in Mathematics (Set Theoretic Topology), and a M.S. in Computer Science (Machine Learning).

More for our Listeners

Please come to www.regulationinnovation.org to check out our new AIR website. Also please follow me on Twitter and LinkedIn.

We have terrific shows coming up. Next up is Colin Walsh, CEO of Varo, on transforming from a fintech to a national bank. We’ll also talk with Albert Forkner, State Banking Commissioner of Wyoming and with Sarah Willis of the Metlife Foundation and Allie Burns, CEO of the nonprofit Village Capital. And we’ll have a conversation with Shamir Karkal and Angela Wilson of Sila.  

We are also launching a special series of shows that will explore how the pandemic may impact the Future of Financial Regulation. We’ll be speaking with some of the most thoughtful people anywhere, starting with former Comptroller of the Currency Thomas Curry.

Most conferences are of course postponed, but I’ll look forward to speaking with many of you virtually at the upcoming Third Party Risk conference of the Santa Fe Group -- https://sharedassessments.org/summit/.

Meanwhile, I hope everyone is safe and healthy. Let’s all keep innovating together.

Support our Podcast

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

Fintech4Good: Sunrise Banks CEO David Reiling

Most of the country, and much of the world, is locked down to counter the pandemic. If you’re like me, most of your interactions with people center on the virus. We’ll be doing shows on those topics, but I also think it’s worth remembering that life goes on and there are other things to talk about..

In that vein, we have a series of shows that we recorded before the crisis, and I’m going to keep bringing them to you.

Today’s guest is David Reiling, CEO and Chairman of Sunrise Banks and author of the book, Fintech4Good. 

My conversation with Dave is very rich, partly because he looks at the issues we discuss on Barefoot Innovation from multiple angles that most people don’t combine --  from the vantage point of community banks, of fintechs, of social mission, and of regulatory change.

Dave’s banking career started as a teller in inner city Los Angeles amidst social unrest, near the site of the Rodney King riots. The bank, which was robbed three times in his first month, was in a neighborhood of good people who were being poorly served because of where they lived. Dave learned a lot from the experience and took his insights back to his hometown in Minnesota. There he bought a community bank that was struggling and would have failed, if its neighborhood had failed. 

In our conversation, he tells the story of learning how to serve the unique needs of that community, and help it thrive. Today he leads a group of innovative banks in a billion dollar organization that is the country’s third largest issuer of prepaid cards. Sunrise is a certified legal benefits corporation -- a B corp -- and a Community Development Financial Institution, or CDFI. It is also a member of the Global Alliance for Banking on Values, operating in ten countries through fintech partners.  

David likes to emphasize the business advantages of being a mission-driven, double bottom line company. He says, for example, that it gives him a huge edge in recruiting top talent. He also believes it also saves on compliance costs. It’s a fallacy, he says, to assume that banks operate in a “scarcity” marketplace in which profits and values have to be traded off against each other.

He also offers insights on key steps regulators should consider, including on the need to push their innovation agendas quickly out to their field examiners.

We talked about David’s book, Fintech4Good. He offers community bankers practical advice about how to accelerate their technology journey and argues that, far from fearing technology, they should seize on it as a massive opportunity to better serve their customers and expand access, especially by engaging with fintech companies and thinking beyond their traditional product lines. 

David says the difference between banks that will succeed and those that fail is going to be entrepreneurial spirit, good governance, willingness to partner, engagement with regulators, and courage. He says anyone who still has a mindset of “this is how my father and grandfather did banking,” will not survive.

He also said something I believe and try to live by, myself:  In today’s fast-changing world, it has become more risky to stay the same than to try something new.

Links

• Transcript

• Fintech Done Right Aims to Help, Not Hurt

• Fintech for Good: Five Innovators Changing The Banking World

• sunrisebanks.com

• Related Barefoot Innovation Podcast: The American Dreamers: Earnup Cofounders Matthew Cooper and Nadim Homsany

• Financial Health Network

• Twitter: @ReilingDavid

• David Reiling on LinkedIn

• Jo Ann’s Harvard Papers 

• Todd Baker: FinTech Alternatives to Short-Term Small-Dollar Credit: Helping Low-Income Working Families Escape the High-Cost Lending Trap

• Todd Baker: The Power of the Salary Link

More on David

David Reiling is a social entrepreneur who is an innovator in community development finance and financial inclusion. He is the Chief Executive Officer of Sunrise Banks and has been in the community development banking industry for more than 25 years. Under David’s leadership, Sunrise Banks became the first Minnesota bank certified as a Community Development Financial Institution (CDFI), a certified B-Corp, a legal Benefit Corporation, and a member of the Global Alliance of Banking on Values.

Sunrise has grown its assets its and social and environmental impact tenfold since David’s arrival in 1995. Total assets exceed $1.4 billion and is ranked by B Lab as one of the best banks in the world for positive social and environmental impact. Sunrise executes a two-fold strategy under one mission: to be The Most Innovative Bank Empowering Financial Wellness. As a place-based community development bank, it serves the urban core of Minneapolis and St. Paul, Minnesota. As a people-focused financial institution, Sunrise partners with values-aligned financial technology firms to provide better access to convenient, easy-to-use, and fairly-priced financial services globally.

David is currently a board member of the Entrepreneur’s Organization of Minnesota and the Community Development Bankers Association. He is immediate past-Chair of the Consumer Financial Protection Bureau’s Community Bank Advisory Board. David has been recognized by Minneapolis-St. Paul Business Journal as a Most Admired CEO and by Ernst & Young as Entrepreneur of the Year. Trust Across America named him Most Trusted CEO for five years running and recently gave him their Lifetime Achievement Award.

David is a graduate of the University of San Diego and the University of Wisconsin Graduate School of Banking. He is an avid surfer, bicyclist, and traveler. 

More for our Listeners

Remember to leave us a five-star rating on your favorite podcast platform so we can help more listeners find us. Please subscribe to Barefoot Innovation -- our newsletter, podcast, and updates, donate to keeping the show going, and follow me on Twitter, and LinkedIn. You can also visit AIR to learn about the Alliance for Innovative Regulation and the exciting work we are doing in the Regtech space.

Coming soon, we will have conversations with Ellison Anne Williams, CEO of Enveil, and Colin Walsh, CEO of Varo. We’ll talk with Sarah Willis of the Metlife Foundation and Allie Burns, CEO of the nonprofit Village Capital. We’ll hear from Albert Forkner, State Banking Commissioner of Wyoming and from the founders of Sila, Shamir Karkal and Angela Wilson.

Finally, a note of caution:  Conferences are all suspended and so everyone is meeting virtually. We at AIR recently hosted a meeting on Zoom, which unfortunately experienced what’s called a zoom bomb, in which malicious actors briefly took control of the screen and microphones to project highly offensive materials. We solved the problem and were back up and running within a few minutes, but I’m mentioning it as a caution, especially if you have kids learning at home using a Zoom or similar platform. Check your security settings.

I hope everyone listening is well. Stay safe.

Support our Podcast

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

Financial Regulators’ Dilemma: Regulatory Modernization with Jerry Buckley and Sasha Leonhardt

First, a message for our listeners.

I’m recording this episode in mid-March, as the Coronavirus pandemic disrupts life all over the world, bringing upheaval to our health, our economies, and our social connections. We will be working to expand our podcast as a channel that builds dialogue and community for our listeners and guests. In addition, our nonprofit, the Alliance for Innovative Regulation, is exploring other ways to maintain a rich flow of news and ideas, despite our being unable to assemble, to touch each other, and to see each other in person. We all need to be able to continue to hear each others’ voices, in all the kinds of media we have available, in the months ahead. We will work on this. And we will hope and pray for health and security for all of you and for the world we share.

Today’s episode is an unusual one. It arose from a conversation I had over lunch several years ago with an official who was leading an innovation program at one of the US financial regulatory agencies. Over our meal, he began telling me that some of their initiatives were being blocked by a law called the Anti-Deficiency Act. His agency wanted to try out some high-tech new tools, just as regulators do in other parts of the world -- like the Bank of England’s Fintech Accelerator or the tests run by the Monetary Authority of Singapore. With technology changing so fast, today’s regulators need the ability to “test drive” newly-emerging tools and try out options, as the private sector does. But in the US, my friend said, pilot testing like this is often blocked by a Catch 22 situation. One the one hand, regulators typically can’t buy technology for small-scale testing, because their agencies are subject to procurement rules that were designed for major IT purchases -- which typically involve competitive bidding and can consume months or even years to process. On the other hand, agencies also can’t use new tech that is offered to them for free, because that could be construed as accepting a gift, which is prohibited by the Anti-Deficiency Act.

I’m a former bank regulator, but I had never heard of the Anti-deficiency Act. Congress passed it in the late 1800’s, and for a good reason -- to keep the federal government from spending money that hadn’t been appropriated. But here it is, today, impeding innovation by our financial regulators as they try to adapt their agencies to the Digital Age.

That lunch conversation led to a podcast episode with Daniel Gorfine, who at the time was the head of LabCFTC, and also to one with former CFTC Chairman Christopher Giancarlo, exploring these challenges. It also left me continuing to think about how the government, itself, innovates. I began to realize that I was hearing similar stories from other regulators, sometimes about the same law, and sometimes about others. All the US federal financial agencies now have innovation initiatives in some form, and it gradually dawned on me that many of them were finding it difficult to innovate because of rules, laws, and protocols, dating from an earlier age, that complicate how government operates.

I want to emphasize that all of these rules have worthy purposes that were important when they were put in place, and are still important today. They aim to assure transparency, for instance, and to prevent conflicts of interest. However, technology change is in the process of transforming how our whole society operates, including financial services, and including financial regulation. The exponential pace of technological change is going to require the regulatory agencies be able to, in effect, speed up. They will need to detect risks faster, evaluate challenges faster, gather input faster, and implement change faster. Aging rules and protocols that were written back when business was done on paper, and that slow everything down, should be on the table for reevaluation. We should ask, how can we maintain important standards and protections, while enabling innovation too.

As many listeners know, my work has been supported in recent years by the Omidyar Network and its affiliate, Flourish Ventures, which is dedicated to advancing financial inclusion through new technology. Working with Pierre Omidyar’s nonprofit foundation, we were able to enlist the Buckley law firm in Washington DC, in undertaking a pro bono project to evaluate these legal obstacles to innovation by the US financial regulatory agencies. Jerry Buckley and his team conducted off-the-record interviews with a range of agency officials. 

The resulting report is Financial Regulators’ Dilemma: Administrative and Regulatory Hurdles to Innovation. All the issues it cites were raised by the regulators themselves. Some agencies emphasized certain impediments more than others, and not all issues were raised by every agency -- although many were. But every agency expressed concerns about these challenges.

In this episode, I talk with the authors of the report, Jerry Buckley and Sasha Leonhart of the Buckley firm, who explain how they did the project and what they learned. Jerry, Sasha and I also conducted a briefing on Capitol Hill last month, which was very well-attended and has engendered a great deal of constructive feedback and discussion. I want to thank the Buckley firm for undertaking all this work on a pro bono basis. I also want to mention that the report will be published in the coming weeks by the Business and Finance Law Review at George Washington University School of Law.

The report is also a focus of a recent article by Steve Harras in GQ Rollcall magazine that profiles my nonprofit organization, the Alliance for Innovative Regulation. The article quotes our AIR board member, former Comptroller of the Currency Thomas Curry, saying that these procedural obstacles routinely make regulators “throw up our hands” in frustration.  In explaining why, today’s show may dig a bit into the US legal weeds, but for those interested in regulatory modernization, it opens a window onto challenges that are not usually visible. These are real obstacles facing the leaders of the US regulatory bodies as they work to bring technology innovation into the core of how they work.

Links

• Transcript

• Jerry Buckley Bio

• Sasha Leonhardt Bio

• Financial Regulators’ Dilemma: Administrative and Regulatory Hurdles to Innovation

• Podcast interview with Daniel Gorfine, former head of LabCFTC

• Podcast interview with Chris Giancarlo, former head of the CFTC

More on Jerry Buckley

Described by Chambers as "a recognized dean of the consumer finance bar," Jerry Buckley has, over a 40 year career, established himself as an acknowledged leader in financial services law. A founding partner of Buckley LLP, Mr. Buckley assists his clients — banks, mortgage companies, credit card issuers, insurance companies, broker dealers, fintech lenders, investment banks, and private equity investors — with business formations and acquisitions, risk management, and enforcement matters involving federal and state regulators. He has extensive experience with electronic signatures and serves as General Counsel of the Electronic Signatures and Records Association. He is co-author of The Law of Electronic Signatures and Records.

Prior to entering private practice, Mr. Buckley served as Minority Staff Director of the U.S. Senate Banking Committee, where he participated in drafting most of the laws that serve as the foundation for today’s consumer finance law ─ the Real Estate Settlement Procedures Act, the Fair Credit Reporting Act, the Foreign Corrupt Practices Act, the Truth in Lending Act amendments, the Equal Credit Opportunity Act, the Community Reinvestment Act, and the Home Mortgage Disclosure Act.

For many years, Mr. Buckley has been a leading advocate for updating and modernizing the nearly 50-year-old regulatory regime that is slowing down financial innovation.  Several years ago he wrote a widely read article in the American Banker urging development of “dynamic disclosures,” to offer far more useful information to consumers than is provided under the cumbersome and voluminous static disclosures currently provided.  He recently took the lead in a pro bono project producing a white paper on “Regulatory Hurdles to Fintech Innovation,” based on interviews with innovation leaders in each of the federal financial regulatory agencies.    

Mr. Buckley serves as an Adjunct Associate Professor of Law at the American University Washington College of Law. The recipient of numerous awards and honors, he received the Senator William Proxmire Lifetime Achievement Award from the American College of Consumer Financial Services Lawyers in 2015.

More on Sasha Leonhardt

Sasha Leonhardt is Counsel in the Washington, D.C., office of Buckley LLP. Mr. Leonhardt represents financial services industry clients in a wide range of enforcement, litigation, and regulatory matters. Mr. Leonhardt assists clients in resolving government investigations and enforcement actions before a wide variety of federal and state agencies, including the United States Department of Justice, the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and state attorneys general.

Mr. Leonhardt also has substantial experience advising clients on the Servicemembers Civil Relief Act (SCRA), Military Lending Act (MLA), Consumer Financial Protection Act (CFPA), Truth in Lending Act (TILA), Real Estate Settlement Procedures Act (RESPA), Fair Credit Reporting Act (FCRA), Equal Credit Opportunity Act (ECOA), Fair Housing Act (FHA), and Fair Debt Collection Practices Act (FDCPA). In addition, Mr. Leonhardt advises companies, non-profits, and industry associations with consumer privacy issues arising from the Gramm-Leach-Bliley Act (GLBA) and Regulation P, the Fair Credit Reporting Act (FCRA) and its Affiliate Marketing Rule, and state and federal laws that address data privacy and information security.

In addition to representing clients, Mr. Leonhardt has published numerous articles on various aspects of consumer financial services law and practice, including data privacy, class action litigation, white collar litigation, whistleblower lawsuits, and recent trends in regulation and enforcement.  Mr. Leonhardt also maintains an active pro bono practice and serves as a member of the Legal Counsel for the Elderly’s Young Lawyers Alliance. A frequent speaker on a variety of legal topics, Mr. Leonhardt has taught at Duke University School of Law and American University Washington College of Law, and is currently a Professorial Lecturer in Law at the George Washington University Law School.

Mr. Leonhardt received his J.D. from Duke University School of Law (cum laude) in 2010. During law school, he served as Senior Executive Editor of the Duke Journal of Comparative and International Law and as a member of the Duke Law and Technology Review. Mr. Leonhardt received his A.B. from Princeton University in 2005.

More for our Listeners

I hope you found today’s show as thought-provoking as I did. Please subscribe to Barefoot Innovation for more information, and come to www.regulationinnovation.org for information about AIR we’ll be launching our new website soon. And follow me on Twitter and LinkedIn.

As I said at the start of the show, we are going to be innovating about how to make Barefoot Innovation as valuable to you as we can, as we all go through the coming weeks and months of curtailed travel and meetings. We have terrific shows already in the queue. We’ll talk with David Reiling, CEO of Sunrise Banks; with Ellison Anne Williams of Enveil; and with Albert Forkner, State Banking Commissioner of Wyoming. We’ll also talk with Sarah Willis of the Metlife Foundation and Allie Burns, CEO of the nonprofit Village Capital. And we’ll have a conversation with Shamir Karkal and Angela Wilson of Sila.  

This is the point in the show where I usually list upcoming conferences where I’ll be speaking. Most of them have cancelled, although LendIt Fintech USA, May 13-14 in New York, is still assessing the situation. We have been talking with the organizers of some of the cancelled events about doing special podcast episodes to fill some of the gap they’re leaving --  to share key themes and major speakers. So watch this space for new developments.

Meanwhile, I hope everyone is safe and healthy. Let’s all keep innovating together.

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Are you a Bezos or a Musk? Creating Innovation Capital with Jeff Dyer

Jeff Dyer is a professor of strategy at BYU and the Wharton School. He and two co-authors, Nathan Furr and Curtis Lefrandt, have written the book, Innovation Capital, which explores how to lead innovation work, whether for companies or for projects, in situations where the innovator lacks the formal “power” to cause the needed steps. What do you do, for instance, if your boss doesn’t see the need for innovation? How do you get people to want to join your project? 

In our conversation, Jeff says part of the answer is what he calls the human capital skill of forward-thinking -- which he likens to mental time travel, envisioning what people in your industry will want next, and what technology is coming that will enable new things to happen. He talks about spotting opportunities -- being a “scout” and learning to see patterns. He talks about getting other people to want to help so that you can amass the needed resources. And he talks about building an innovation reputation that will continue to attract people to your efforts over time.

A fascinating part of our conversation centers on insights about famous innovators and inventors, like Steve Jobs and Steve Wozniak, or Edison and Tesla. Last year, Jeff and his colleagues conducted research to identify and rank America’s most innovative leaders today. The resulting Forbes Magazine story reports a tie for the number one slot:  Elon Musk and Jeff Bezos. 

The dual ranking spotlights a key factor that differentiates two basic types of innovation challenges. Some are mainly technological in nature -- like the ones Elon Musk tackles --  while a second type is mainly cultural and organizational, like the ones Jeff Bezos excels at solving. Depending on which challenge they face, innovators will need to follow distinctly different paths to success.

When Musk pursues an initiative, for example, he tends to go where there is high technological uncertainty. He asks, can this even be done? Can we create a reusable rocket, or an electric car that can go 300 miles in one charge, or a hyperloop from San Francisco to Los Angeles?  He lays out a lofty and inspiring vision, seeking to get people excited at the outset by being big and bold. He sometimes misses the goal, but he says you have to try to be great to be really good. Bezos, in contrast, innovates around customer demand, on what the coming needs will be. He doesn’t do big and bold. Even with his space company, Blue Origin, he was quiet at the start. He wants to show that something is going to work.

These differences, again, flow from the kinds of problems these innovators choose to take on, and that choice, in turn, fuels big differences in how they manage. Jeff explains how they prioritize which problems to solve first, how they select people, how they work with people, how they sell, and even when they speak at meetings.

Jeff and I talked about the great innovation thinker Clay Christensen, who authored the book, Innovator’s Dilemma (note that we recorded this episode before Professor Christensen passed away in late January). We also talked about the dilemma that the top innovators list has a dearth of women. He shares innovation lessons he learned from former Pepsico CEO Indra Nooyi, about her insights on tying your work to purpose, telling great stories, and leaving the world better than you find it. Let’s hope future lists are more diverse. 

For most of the topics we discuss on Barefoot Innovation, the innovation challenge is in the second category -- the Bezos one, that’s cultural and organizational. The technology already exists to do the big things that are needed in finance and financial regulation. It was invented by other people for other purposes, long ago, and is already at work in other sectors, in mature form. All we have to do is figure out how to get it into finance and regulation, which are inherently hard to change, and which will require many adaptations and safeguards. Still, I see many situations where the Musk approach, the big vision, and inspiration, is exactly what’s needed to galvanize action.

Links

• Transcript

• The Innovator’s DNA Website: https://www.innovatorsdna.com/ 

• Innovation Capital by Jeff Dyer: Amazon

• The Innovator’s Method by Jeff Dyer: Amazon

• Clay Christensen’s Website: claytonchristensen.com

• The Innovator’s Dilemma by Clay Christensen: Amazon

• America's Most Innovative Leaders - Forbes

More on Jeff

Jeff Dyer (Ph.D. UCLA) is professor of strategy at BYU and the Wharton School.  He worked previously as a management consultant at Bain & Company and co-founded the Innovator’s DNA consultancy.   He is the author of three Harvard Press bestsellers on innovation leadership: The Innovator’s DNA,  The Innovator’s Method, and Innovation Capital. 

More for our Listeners

Remember to leave us a five-star rating on your favorite podcast platform so we can help more listeners find us. Please subscribe to Barefoot Innovation -- our newsletter, podcast, and updates, donate to keeping the show going and follow me on Twitter and LinkedIn.

We have wonderful episodes in the queue. If you haven’t already, check out my recent conversations with the Comptroller of the Currency, Joseph Otting and with Jelena McWilliams, Chairman of the FDIC. We also recently posted a fascinating discussion with Greg Becker, CEO of Silicon Valley Bank. 

Coming soon, our conversations with David Reiling, CEO of Sunrise Banks; with Ellison Anne Williams of Enveil; and with Albert Forkner, State Banking Commissioner of Wyoming. We’ll also talk with Sarah Willis of the Metlife Foundation and Allie Burns, CEO of the nonprofit Village Capital. We’ll have a show with Shamir Karkal and Angela Wilson of Sila.  And we have a fascinating conversation with Jerry Buckley and Sasha Leonhart of the Buckley law firm, on a study they did for AIR and the Omidyar Network called The Financial Regulators’ Dilemma, on obstacles to innovation by the federal financial regulators.

Upcoming Events

If you would like to book me to speak to your group, contact jay@provokemanagement.com. 

Meanwhile I’ll hope to see you at these events:

• Innovate Finance Global Summit, April 20-21, London, UK

• Shared Assessments Third Party Risk Summit, April 29-30, Arlington, VA

• LendIt Fintech USA, May 13-14, New York, NY
  

And for regulators, I’m looking forward to speaking at an upcoming conference of the FFIEC and will hope to see many of you there.

Until then, keep innovating!

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Banking the Innovators: Silicon Valley Bank CEO Greg Becker

Silicon Valley got its name in 1971, in the title of an article by electronic news reporter Don Hoefler, who had heard it at a business lunch. The valley -- originally the southern part of the San Francisco Bay Area -- was becoming the cradle of global technology innovation driven by the invention of transistors and chips made of silicon -- the 14th element on the Periodic Table. 

These companies were introducing not only new technology, but also new business models, enabled by the concurrent emergence of a new breed of venture capital firm. They needed a new kind of bank. About a decade later, one was founded to serve them. 

My guest today is Greg Becker, the CEO of Silicon Valley Bank.

We met on a sunny day at their offices on Sand Hill Road in Menlo Park. The building is unique among banks, that I know of, in having a lobby wall displaying wines from their specialty financing group that serves vineyards and wineries. SVB’s market includes a wide spectrum of tech sectors, including health care, space technology, and AI. Greg and I had a wide-ranging conversation about innovation in general, and fintech innovation in particular, in the US and around the world.

A theme of our talk was Greg’s insight that fintech has shifted from its early focus on supporting large industries to, today, disrupting them. He thinks -- and I agree -- that their innovation is now forcing financial companies of all types and sizes to deeply rethink their traditional business models. He also thinks the industry should assume that Big Tech will enter financial services on a larger scale. While he thinks some banks won’t successfully make the tech shift, he is confident that many will, and he believes, as I do, that both providers and consumers will be better for it.

SVB is a global business. Greg talks about how innovation is coming faster internationally than in the US  -- he cites China as an example -- which means that SVB needs to be in touch with trends in the innovation hotspots worldwide. In addition, he notes that SVB’s US customers tend to expand internationally at an earlier stage than non-tech companies do, further reinforcing the need for global reach.

Greg is optimistic about tech, including the power of fintech to drive down costs and therefore open financial access to nearly everyone -- he cites the book, How the Poor Can Save Capitalism by John Hope Bryant. He says adding AI to anything is like putting it on steroids, making everything much more interesting and powerful. At the same time, he shares his thinking on what we should worry about, including the ethics and impacts of AI and medical technology.  

We talked about regulatory trends, including which countries are creating welcoming environments for innovation -- he mentions the UK, Israel, and China and has an update on India. He talks about the regulatory challenges ahead as fintech reshapes finance, and offers some advice for US regulators, including on privacy. 

He also offers both business and regulatory advice for startups, based on his many years of seeing success and failure.

Links

• Transcript

• Greg's Profile at SVB

• SVB on Twitter

• SVB on LinkedIn

• SVB on Instagram

• How The Poor Can Save Capitalism by John Hope Bryant: Amazon.com

More on Greg

Greg Becker has been a champion of the innovation economy since he joined Silicon Valley Bank in 1993 as a banker to fast-growing technology companies. Today, he is the CEO of the world’s only bank dedicated to the innovation sector around the world.

Silicon Valley Bank’s mission is to help increase the probability of its innovative clients’ success globally. Under Greg’s leadership, Silicon Valley Bank’s growth rate has continued to outpace other banks. SVB has been named one of the best banks in America, one of the fastest-growing public companies in the U.S., and one of the best places to work. SVB is also an advocate for entrepreneurs, their investors and corporates in the innovation sector internationally. In 2018, SVB joined the S&P 500 and became a member of the Bloomberg Gender Equality Index. Greg has been recognized as a top influencer in global finance by Worth Magazine and was named the #1 bank CEO for midcap banks by Institutional Investor Magazine.

In 2018, Greg was elected to the Federal Reserve Bank of San Francisco as a Class A Director. He is a member of the Executive Council of TechNet and the Silicon Valley Leadership Group (SVLG), where he was the Chairman from 2014-2017. Greg was also a member of the U.S. Department of Commerce’s Digital Economy Board of Advisors from 2016-2017.

More for our Listeners

Remember to leave a five-star rating for the show on your favorite podcast platform. You can subscribe to Barefoot Innovation -- our newsletter, podcast, and updates, donate to keeping the show going, and follow me on Twitter, LinkedIn, and Facebook. Please also visit AIR to learn about the Alliance for Innovative Regulation and the exciting work we are doing in the Regtech space.

If you haven’t already, be sure to check out my recent thought-provoking conversations with two heads of US bank regulatory agencies:  Comptroller of the Currency, Joseph Otting, and FDIC Chairman Jelena McWilliams. Coming up, we have a show with Jeff Dyer about his book, Innovation Capital and we have a conversation with Ellison Anne Williams of Enveil. We have a fascinating discussion with David Reiling, CEO of Sunrise Banks, and also one with Sarah Willis of the Metlife Foundation and Allie Burns, CEO of the nonprofit Village Capital. We have a very interesting conversation with Sharmir Karkal and Angela Wilson of Sila. And I know you’ll enjoy my discussion with Albert Forkner, State Banking Commissioner of Wyoming, about their efforts to make Wyoming the US hub of crypto finance.

Upcoming Events

If you would like to book me to speak to your group, contact jay@provokemanagement.com. 

Meanwhile, I’ll hope to see you at these events:

• American Bar Association 2020 Section Spring Meeting, March 27, Boston MA

• Innovate Finance Global Summit, April 20-21, London, UK

• Shared Assessments Third Party Risk Summit, April 29-30, Arlington, VA

• LendIt Fintech USA, May 13-14, New York, NY

And for regulators, I’m looking forward to speaking at an upcoming conference of the FFIEC and will hope to see many of you there.

Support our Podcast

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The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

Jelena McWilliams, Chairman of the FDIC

The United States has never had a bank regulator like Jelena McWilliams. She is the Chairman of the Federal Deposit Insurance Corporation, and I’m delighted to say that she is my guest on today’s show.

In a moment you will hear Jelena tell her story, and I promise, you will see what I mean. Last year the Wall Street Journal ran a profile on her called, America’s Most interesting Bureaucrat. She was born in the former Yugoslavia, grew up in a Communist society, got herself to the US, bootstrapped herself into law school, worked in private practice, and at a bank, and at the Federal Reserve and then at the US Senate in the midst of the financial crisis. Her eclectic background has enabled her to look at today’s financial system from many angles. 

As you will see, she is also a disruptive thinker with a unique style of leadership that, frankly, makes people want to follow. 

The Chairman is putting all this to very good use. The exciting thing for our listeners is that she has made it her top priority to “transform” how banks are supervised. She wants to have that shift fully rooted in agency culture and processes before her term as Chairman ends, which will be in about three-and-a-half years.

It’s an ambitious agenda. How do you take the helm of a government agency that is nearly 90 years old, that was born in crisis and exists to avert risk, and, today, build on its deep wisdom and proud traditions to move it, rapidly, to the front edge of the Digital Age?

Chairman McWilliams has a game plan for this. It includes launching a new innovation lab. It includes recruiting tech people onto her team. And it includes thinking differently.

For our tech listeners, don’t miss her entertaining pitch, near the end of our conversation, about why she needs your talents -- and more importantly on why you are going to want to go work for the FDIC. It echoes one she made last year at our AIR tech sprint on financial crime, which she keynoted and where she served as a judge in our hackathon. A new era has started, driven partly by the fact that the regulatory realm, long regarded by the tech world as slow and not very interesting, is suddenly filled with fascinating, difficult, world-impacting problems, from inclusive finance to fighting human trafficking. And it’s ripe, now, for great new technology.

For listeners outside the US, the FDIC is one of our major bank regulatory agencies. Its main mission is to safeguard the insurance fund that guarantees the safety of funds that people deposit in banks. The US has a “dual banking system,” which means that some banks are chartered by the federal government (see our recent episode with the Comptroller of the Currency, which issues those federal charters) while other banks are chartered by the 50 state governments. All of them must carry FDIC insurance, so the FDIC has a key role in overseeing the whole system. Day-to-day, it is the primary federal supervisor of most of our small banks – of which there are several thousand.

The FDIC also has a lead role in the growing dialogue about whether and how new kinds of companies, including fintechs, should be able to get bank charters, because it can approve or disapprove a special type of state charter called an Industrial Loan Corporation, or ILC. In addition, most of the US “partner banks” that work with nonbank fintechs are supervised by the FDIC, which has put it at the forefront of much of the federal thinking about fintech innovation.

Before we turn to the conversation, let me share an update. As regular listeners know, I have launched a new nonprofit called AIR -- the Alliance for Innovative Regulation. Most of the work we have been doing over the years at Barefoot Innovation Group is flowing over to AIR where we’ll continue it, bigger and better. The Barefoot Innovation podcast will continue, and we’ll sometimes add my AIR Cofounder David Ehrich as a host. Like Chairman McWilliams, our team at AIR knows that transforming financial regulation for the Digital Age will take years – even decades – but also that it’s urgent to start now. Please come to AIR at www.RegulationInnovation.org, to see what we’re doing – including our soon-to-be published request for comments on A Regtech Manifesto.

I have been fortunate to have had numerous occasions to talk with Chairman McWilliams, and this one was the most thought-provoking, and the most fun. I know you are going to thoroughly enjoy my conversation with FDIC Chairman, Jelena McWilliams.

Links

• Transcript

• America’s Most Interesting Bureaucrat - Wall Street Journal

• UK Financial Conduct Authority Financial Crime Tech Sprint hosted by AIR in the United States

• American Banker Op-ed on Fintechs 

• Keynote Remarks by FDIC Chairman Jelena McWilliams on the "The Future of Banking" 

• FDIC Social Media handle for Twitter/Instagram: @FDICgov

More on Jelena McWilliams

Jelena McWilliams is the 21st Chairman of the Federal Deposit Insurance Corporation.  Previously, she was Executive Vice President, Chief Legal Officer and Corporate Secretary at Fifth Third Bank in Cincinnati.  Prior to joining Fifth Third Bank, McWilliams worked in the U.S. Senate for six years, including as Chief Counsel and Deputy Staff Director with the Committee on Banking, Housing and Urban Affairs and as Assistant Chief Counsel with the Small Business and Entrepreneurship Committee.  From 2007 to 2010, McWilliams was an attorney with the Federal Reserve Board. Before entering public service, she practiced corporate and securities law at Morrison & Foerster LLP in Palo Alto, California, and Hogan & Hartson LLP in Washington, D.C. McWilliams graduated with highest honors from the University of California at Berkeley, earning a bachelor’s degree in political science and law degree from U.C. Berkeley School of Law. 

More for our Listeners

Remember to leave us a five-star rating on your favorite podcast platform so we can help more listeners find us. Please subscribe to Barefoot Innovation -- our newsletter, podcast, and updates, donate to keeping the show going, and follow me on Twitter and LinkedIn. You can also visit AIR to learn about the Alliance for Innovative Regulation and the exciting work we are doing in the Regtech space.

We have wonderful episodes in the queue. 

If you haven’t already done so, check out my recent thought-provoking conversation with Comptroller of the Currency, Joseph Otting. Up soon we have a fascinating discussion with Greg Becker, CEO of Silicon Valley Bank and a show with Jeff Dyer about his book, Innovation Capital. We have conversations with David Reiling, CEO of Sunrise Banks and Ellison Anne Williams of Enveil.  And, soon I’ll be speaking with Sarah Willis of the Metlife Foundation and Allie Burns, CEO of the nonprofit Village Capital, as well as Albert Forkner, State Banking Commissioner of Wyoming.

Upcoming Events

If you would like to book me to speak to your group, contact jay@provokemanagement.com. 

Meanwhile, I’ll hope to see you at these events:

• American Bar Association 2020 Section Spring Meeting, March 27, Boston MA

• Innovate Finance Global Summit, April 20-21, London, UK

• Shared Assessments Third Party Risk Summit, April 29-30, Arlington, VA

• LendIt Fintech USA, May 13-14, New York, NY

Support our Podcast

---

---

The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.

Joseph Otting, Comptroller of the Currency

I am thrilled to say that today’s guest is the 31st Comptroller of the Currency, Joseph Otting.

For our listeners outside the United States, the Office of the Comptroller of the Currency, or OCC, is a bureau of the US Department of the Treasury and is the agency that charters and supervises our national banks -- those with federal charters. That includes all the very large US banks and many of the small ones.

The OCC always cites each Comptroller’s number in the line of succession, much the way people reference the number of the US president, as in President Trump being number 45. I think that tradition may have arisen because the Comptroller's Office is our oldest bank regulatory agency, founded in 1863. Its antique-sounding name reflects the fact that before the Civil War, bank notes were issued by private banks, and the federal government had to step in and control the currency chaos caused by the war.

As I discussed with Comptroller Otting, I myself am a proud alumna of the OCC -- I was once a Deputy Comptroller. Decades after leaving, my experience there still shapes how I think. As he notes in our conversation, there is a saying that once you have the OCC tattoo, you have it forever. It’s a venerable agency full of incredibly talented people. 

But of course, like every other financial regulatory body today, it has to change. Comptroller Otting came into his role from the background of being a banker, and he has a very robust agenda for modernization. In our talk, he walks us through his priorities.

One is driving for efficiency (he talks about replacing paper binders with electronic communications and cutting operating costs by $180 million). 

Another is modernizing regulations and policies. He shares his thinking on how to update the The Bank Secrecy Act and Anti-Money Laundering, as well as small-dollar consumer lending. He also talks in depth about the proposal issued by the OCC and the FDIC on modernizing the Community Reinvestment Act.

The Comptroller’s third goal is what he calls empowerment -- equipping the OCC’s field Examiners-in-Charge, or EIC’s, with greater authority.

We covered a great deal of other ground. He shares his thinking on how the OCC needs to use technology; on how technology is transforming banks; on top emerging risks, especially in cyber; on the need for banks to use AI in compliance and risk management; and on equipping community banks to compete in today’s high-tech market. 

He talks about the increasing level of interagency coordination underway today. The US has five federal agencies that directly supervise depository institutions, which makes coordination complex and sometimes slow. I was pleased to hear that just before we recorded this show, he had been at a recurring lunch meeting he has with two other agency heads.

The Comptroller also talks about the OCC’s innovation initiative, which was one of the first set up by a US regulator. In a prior episode we talked about that program with former Comptroller Tom Curry, who established that unit.

Our talk also covered prospects for the OCC offering a specialized national bank charter for fintechs -- the Comptroller is very optimistic that the litigation on that issue will be resolved. On that topic, you might enjoy hearing the show we did with CSBS CEO John Ryan.

Comptroller Otting has a big agenda, and he says we should expect a lot of rule-making in 2020.

Links

• Transcript

• OCC.gov

• OCC Office of Innovation

• Podcast interview with previous Comptroller, Tom Curry

More on Joseph Otting

Joseph M. Otting was sworn in as the 31st Comptroller of the Currency on November 27, 2017. 

The Comptroller of the Currency is the administrator of the federal banking system and chief officer of the Office of the Comptroller of the Currency (OCC). The OCC supervises more than 1,200 national banks, federal savings associations, and federal branches and agencies of foreign banks operating in the United States. The mission of the OCC is to ensure that national banks and federal savings associations operate in a safe and sound manner, provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations. 

The Comptroller also serves as a director of the Federal Deposit Insurance Corporation and member of the Financial Stability Oversight Council and the Federal Financial Institutions Examination Council. 

Prior to becoming Comptroller of the Currency, Mr. Otting was an executive in the banking industry. He served as President of CIT Bank and Co-President of CIT Group. 

Mr. Otting previously was President, Chief Executive Officer, and a member of the Board of Directors of OneWest Bank, N.A. Before joining OneWest Bank, he served as Vice Chairman of U.S. Bancorp, where he managed the Commercial Banking Group and served on the Bancorp’s executive management committee. He also served as a member of U.S. Bank’s main subsidiary banks’ Board of Directors. 

From 1986 to 2001, Mr. Otting was with Union Bank of California, where he was Executive Vice President and Group Head of Commercial Banking. He was previously with Bank of America, holding positions in branch management, preferred banking, and commercial lending. 

Mr. Otting has played significant roles in charitable and community development organizations. He has served as a board member for the California Chamber of Commerce, the Killebrew-Thompson Memorial foundation, the Associated Oregon Industries, the Oregon Business Council, the Portland Business Alliance, the Minnesota Chamber of Commerce, and Blue Cross Blue Shield of Oregon. He was also a member of the Financial Services Roundtable, the Los Angeles Chamber of Commerce, and the Board and Executive Committee of the Los Angeles Economic Development Corporation. 

Mr. Otting holds a bachelor of arts in management from the University of Northern Iowa and is a graduate of the School of Credit and Financial Management, which was held at Dartmouth College in Hanover, New Hampshire. 

More for our Listeners

Remember to leave us a five-star rating on your favorite podcast platform so we can help more listeners find us. Please subscribe to Barefoot Innovation -- our newsletter, podcast, and updates, donate to keeping the show going, and follow me on Twitter, LinkedIn, and Facebook. 

Also, please come to the website of the new nonprofit I have cofounded. AIR is the Alliance for Innovative Regulation, launched last year to help modernize financial regulation through technology.

We have wonderful episodes in the queue. 

Next up, we have another US agency head -- a thought-provoking show with FDIC Chairman Jelena McWilliams. We have a fascinating discussion with Greg Becker, CEO of Silicon Valley Bank,and a show with Jeff Dyer about his book, Innovation Capital. We have conversations with David Reiling, CEO of Sunrise Banks and Ellison Anne Williams, CEO of Enveil.  We’ll be talking with Albert Forkner, State Banking Commissioner of Wyoming, which is takin interesting initiatives in crypto-currency regulation.. And, soon I’ll be speaking with Sarah Willis of the Metlife Foundation and Allie Burns, CEO of the nonprofit Village Capital.

If you would like to book me to speak to your group, contact jay@provokemanagement.com. 

Meanwhile I’ll hope to see you at these events:

• Paris Fintech Forum, January 28-29, Paris, France

• India FinTech Festival,  March 4-5, Mumbai

• Innovate Finance Global Summit, April 20-21, London, UK

• Shared Assessments Third Party Risk Summit, April 29-30, Arlington, VA

• LendIt Fintech USA, May 13-14, New York, NY

And for regulators, I’m looking forward to speaking at an upcoming conference of the FFIEC and will hope to see many of you there!

Support our Podcast

---

---

The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.