Today, I hope to hear from our witnesses about the ways in which fintech is changing the financial sector and the improvements that can be made to ensure the regulatory landscape welcomes that innovation; what kind of data is being collected and used, and how such data is secured and protected; and what are the opportunities and challenges going forward?
From Mr. Knight's statement, pertaining to data collection:
As the Treasury Report notes, the ability of financial service providers to collect and utilize a broader and more diverse selection of consumer data has the potential to improve the provision of financial services, especially to consumers who are poorly served by the status quo.3 Not only could cost-effective access to more data help established firms improve their offerings, it could also encourage competition and innovation from new entrants.
While the ability to access and utilize more data has a significant upside, it also presents risks. For example, it is possible that the more granular a dataset a financial institution collects on a consumer, the more harm a security breach could cause. Data that might be relatively harmless at one level of detail could become highly sensitive at another. What could be labeled “professional or medical services” at one level of detail could be labeled “marriage counseling” at another. While obtaining more information could allow financial services providers to offer better products, we should also be alert to the risks that could develop.
Additionally, as the Treasury Department notes, there are divergent regulations at the state level regarding data security and breach notification.4 These different requirements can increase compliance costs for firms and result in citizens being regulated by sets of rules put in place without consultation with them, the consumers.5 Given the predominantly interstate nature of cybersecurity, there is little question that Congress could constitutionally preempt state law to create consistent national standards, and given the costs of the status quo, it may want to consider doing so.
A FinTech hearing was also held earlier this year. Mr. Knight testified at that hearing as well.
#FinTech BINGO tomorrow. Get your popcorn ready: https://t.co/oh6MpKXK01— Jackson Mueller (@jackson_mueller) September 17, 2018
This is not a great idea. A better idea? Go to Congress and get changes to the law to allow states to offer comparable #fintech charters/allow state licensed non-banks to compete on a national basis on par with OCC #fintech banks. https://t.co/JKXtS3t5pU— Brian Knight (@BrianRKnight) September 12, 2018
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