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

New Generation


New Generation

Mallory Kwiatkowski

This month my daughter and son-in-law had their first baby.

Holding a newborn makes you long for a better world. We can’t know what the future holds overall, but I do know one thing:  Christopher’s generation will do better than any before in one realm of life  -- finance.

When I started my fellowship at Harvard, a colleague introduced me to academic work on “wicked” problems, meaning problems so complex that they seemingly cannot be solved. Consumer financial health has always been one of these. Rich or poor, young or old, healthy or hurt, elite or outcast, everyone has a financial life. Everyone takes money in, pays it out, and hopes to save and maybe borrow. Throughout history, many people have struggled to do these simple tasks, unable to access and afford mainstream services, and/or harmed by the services they use or how they use them. For decades, even centuries, we’ve tried to solve this wicked problem mainly by regulating finance. For many people, we’ve largely failed.

Today, technology is solving it for us. For everyone...

Technology has begun to convert consumer financial ill-health from a huge wicked problem to a marginal one. It’s making it possible for everyone, from every station in life, to manage their money in ways that help them thrive. It’s bringing low-cost services to every corner of the earth through mobile phones; new data for inclusive but sound underwriting; new ways to prove identity; simple and transparent products; micro-payments; easy, automatic budgeting, saving, and financial management; personal (robot) financial advisors for all; reminders to do what we should; help with resisting temptation; armor against scams, and much more. All this is coming in fits and starts, with failures and problems and hard-won lessons along the way, but it is coming, this is certain. It’s being driven by technology trends much bigger than finance, like mobile technology, big data, artificial intelligence, blockchains, and voice interface.

Correction:  it’s coming for sure...if we regulate it right. Policymakers need to allow good innovation to emerge, and also block new risks coming with it.

That won’t be easy. The challenges are novel, and they’re coming very fast, and on multiple fronts. And regulatory change is always hard, tangled up with politics, traditional cultures, well-motivated carefulness, and in the United States, fragmented agency structures. Making regulation effective and efficient is a wicked problem, in itself.

This is what we need to work on. We need regulation innovation, that’s smart about fintech and that adopts regtech.

We need a new generation of financial policy.

Other updates

On June 30 I finished my senior fellowship with the Harvard Kennedy School Mossavar-Rahmani Center for Business and Government. I was there for two years, writing a book on financial innovation and regulation. I’m still working on it  (my subject matter is a moving target), but will publish a paper on my research and recommendations.

“Fellowship” is a perfect word for my Harvard experience. I’ve moved back to Washington, but cherish my connections with the other fellows, the students, faculty and staff, and the university community. It brought learning and inspiration, every day.


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As always, check the website for more updates, and keep innovating -- for that new generation!

Jo Ann

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