Community Banking and Fintech
On April 11, 2019, the Board of Governors of the Federal Reserve System released a speech by Federal Reserve Governor Michelle W. Bowman at the “Fed Family” luncheon at the Federal Reserve Bank of San Francisco. Her speech focused on how community banks can collaborate with fintech firms and the role the Federal Reserve can play in fostering prudent community bank innovation. She noted that while fintech firms originate a larger share of personal loans than banks, a substantial portion of fintech lending is actually originated by bank partners working with fintech firms. Rather than fear fintech, community banks may look at fintech firms as complementing their activities. She pointed out that community banks have the distinct advantage of strong relationships with their small business customers that fintech firms would fine hard to replicate. She thinks community banks can take advantage of fintech’s new technologies and built-in efficiencies and utilize that as an extension of the community banks’ relationship-banking model. She also feels that the Federal Reserve should look closely at its work to make sure it is not hindering prudent innovation between banks and fintech firms.
CLA’s financial institution regulatory compliance team assists banks and credit unions nationwide in establishing regulatory compliance programs, conducting compliance testing, and training staff on regulations. Justin Robinson is a member of CLA’s regulatory compliance team and can be reached at justin.robinson@CLAconnect.com.
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