By John M. Pachkowski, J.D.
Financial Innovation Now, a public policy coalition comprised of Amazon, Apple, Google, Intuit, and PayPal, has released a report detailing the current state and federal regulatory compliance requirements for new marketplace innovators in financial services.
The report entitled "Examining the Extensive Regulation of Financial Technologies" summarized the regulatory environment for two new categories of financial services: online lending and emerging payments technologies. Specifically, the report examined the types of regulations that two hypothetical innovators—a payments security technology and an alternative small business lending service—face in providing their services. The report also provides an overview of the comprehensive regulatory scheme covering data security as well as the laws governing consumer protection and anti-money laundering that apply to these new entrants.
Although it has been argued that new technologically advanced services somehow face fewer regulations and unfairly benefit from an unlevel playing field, the report concluded, "If anything, the regulatory playing field is heavily tilted against new entrants." It added, "Like banks, these companies are heavily regulated within their respective business lines. They are, in fact, subject to the same regulations as banks and are subject to extensive oversight by government agencies, bank customers, card brands and their insurance companies."
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