The US Federal Reserve is reluctant to grant fintech access to the country’s financial infrastructure, including its clearing and settlement systems.
The concern arises from the perception that these companies do not have robust risk controls or consumer protection systems that common banks must have to operate.
“I am concerned that the fintech is the source of the next crisis,” said St. Louis Fed President James Bullard in November 2018.
A similar position: Atlanta Fed President Raphael Bostic.
“Atlanta is trying to be a fintech hub, so I have the opportunity to speak with many entrepreneurs. Almost none is at risk among their priorities and that makes me nervous, “he revealed.
Some officials fear that direct access to the federal payment system could mean that the collapse of a fintech, IT failures or a cyber attack affects everyone.
While the Fed doubts, the Office of the Comptroller of Currency began accepting applications in 2018 to allow fintech that do not accept deposits operate throughout the country without having to comply with the different rules of state regulators, detailed Business Insider.
The bet is that companies like PayPal, which has attracted millions of users thanks to convenience, help expand the population’s access to financial services because they can serve people with lower incomes, due to lower operating costs compared to the traditional banks.
However, these companies hesitate to apply for the statute and expand in the United States if they can not access the same Fed services that banks use, since access to the central bank’s payment system would mean that they will not pay the bank routing fees. .
According to Business Insider, despite US efforts to help banking companies launch financial products, “there is still no cohesive regulatory framework to truly encourage and support the industry.”
To the reticence of the Fed are added the positions of traditional banking institutions, which demand that fintech have access to the payment system only if they meet the same requirements that the authorities apply to them.
“You do not want a new player to skip existing rules and regulations and call it innovation,” said Paul Merski, executive vice president of the Independent Bankers of America Community.
All the activity of traditional banks is heavily regulated at the state and federal levels, including capital and liquidity requirements, risk management, anti-laundering rules, bank secrecy and the granting of fair and non-discriminatory loans.
Despite the uncertainty, the sector does not stop. Between 2010 and 2017, more than 3,300 fintechs were created and financing grew 13 times to 22,000 million dollars.