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Jo Ann Barefoot explores how to create fair and inclusive consumer financial services through innovative ideas for industry and regulators

Changing the World


Changing the World

Mallory Kwiatkowski

In the past three weeks I’ve participated in six events on fintech and regtech with international bank regulators – averaging twice a week. There were three in London during the Innovate Finance summitone in Washington connected with the World Bank spring meetings; one in San Francisco with a Basel task force; and another in New York.

In March there were two more -- the one in Jakarta that I described in last month’s post plus a briefing in New York for senior bank supervisors from the major economies.

That’s six meetings on three continents, with regulators from six continents, just in March and April -- and just the ones I went to. And I got invited to more.

Something big is happening.

It’s an awakening, by governments worldwide, to the new world they face as innovative technology transforms finance, and especially to the magnitude and speed of the change confronting them. Central banks and bank supervisors are moving to address two things.

First, they have to figure out how best to regulate fintech in order to see its promise fulfilled while blocking the downside risks embedded in it. That’s a daunting task -- walking a knife-edge to avoid choking off innovation that can bring enormous benefits to financial customers and  markets. Regulators are realizing that they must develop new skills, models and cultures, must work toward common principles without imposing static standards, and must learn to move more quickly despite uncertainty. They are recognizing that stepping forward is risky, but so is standing still.

Second, regulators are moving to adopt regtech. The same new technologies that are driving fintech – big data, artificial intelligence, distributed ledger technology (DLT) and others – can now be harnessed to transform regulation itself. Experiments are underway from London to Singapore to Australia.

One example is RegTech for Regulators Accelerator, or R2A, using funding from the Gates Foundation and Omidyar Network, among others, to help several countries develop concrete solutions for specific regulatory priorities. Another is the UK’s Financial Conduct Authority “tech sprints” (hackathons) to fashion new regulatory approaches.

Some of this innovation is about the drive to reach full financial inclusion through cell phones and digital technology (see my podcast ‘Financial Inclusion is Coming Fast’ with AFI’s Alfred Hannig). Some of it is just about bringing regulation into the digital age.

Technology is creating a chance for optimization -- a rarity for government -- that can improve public policy outcomes and cut regulatory costs, at the same time.

The London Innovate Finance and FCA International FINTECH Conference events were especially thought-provoking. Visionary regulators have begun a true global dialogue.

 And it was especially fun recording THIS VIDEO in London with Hub Culture.

Speaking of vision, I enjoyed moderating a session month at the FinXTech Summit in New York, especially because, finally, someone is bringing together fintechs and forward-looking community banks in the same room. I think the future of community banks depends on partnering with innovators.  The summit was sponsored by Bank Director magazine, which also quoted me in an interview this month.

I also was pleased to contribute to the GAO’s important new report on regulatory oversight of financial technology, which came out this month.

Last but certainly not least, I had great fun recording this podcast with Zach Miller of Tearsheet about regulation innovation and my own adventures in podcasting. It’s always delightful to be the guest instead of host!

As always, check the website for more updates.  I hope to see you June 15th, in Austin, TX, for the Center for Financial Services Innovation gathering (CFSI Emerge) and at the ABA’s Regulatory Compliance Conference in Orlando.

Keep innovating!

Jo Ann