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January 30, 2018 – FIN’s Executive Director, Brian Peters, today testified before the House Financial Services Committee at a hearing about the opportunities and challenges of financial technology. FIN’s written testimony can be found here, and Peters’ oral statement follows the hearing video below.

 

“Thank you Chairman Luetkemeyer, Ranking Member Clay, and members of the Committee for the opportunity to testify. My name is Brian Peters, and I am the Executive Director of Financial Innovation Now (“FIN”), an alliance of tech companies working on policies to make financial services more accessible, safe and affordable. The members of FIN are Amazon, Apple, Google, Intuit, and PayPal.

“These companies are at the forefront of America’s economic growth. They collectively employ over 700,000 people and spend more on R&D ($40 billion annually) than any other companies in the United States.

“They are innovating many new financial tools, such as digital wallets, secure online payments, personal finance apps, and access to capital for small businesses. Many of these tools work in partnership with traditional financial institutions.

“We believe that one of the best opportunities of technology is the potential to improve financial inclusion, and increase access. Twenty five percent of Americans remain unbanked or underbanked, but there is growing evidence that the mobile internet is helping to reduce some of the traditional barriers to financial services.

“The speed of money also matters. In our era of instant messaging, it does not make sense that it can still take days for a payment to clear. For those on a tight budget, like the half of Americans living paycheck to paycheck, this delay could cause undue hardship in the form of high-cost alternative financial services, sometimes costing ten percent of income just to access money when it is needed.

“Fortunately, the Federal Reserve is shepherding a commendable industry-led effort to achieve faster payments by 2020. FIN is part of this effort and supports the Fed’s leadership because we want real-time payment clearing to be a 24-7 reality – as soon as possible.

“Financial management apps also offer another area of promise. These tools have helped millions of consumers and businesses create budgets, set savings goals, avoid fees, and find better offers … it’s like having your own personal accountant.

“Small businesses also have new options. FIN members already offer a broad set of small business technology tools, including payment processing, payroll, inventory management, sales and data analytics, and shipping logistics… all of which make basic elements of running a business faster and less expensive – both online, and on Main Street.

“We are now expanding this technology toolbox with the addition of capital, and it is our broader integration of these tools that enables small businesses to utilize their own sales and accounting data to qualify for capital quickly and conveniently. Importantly, early research shows that these sources of capital are filling gaps for underserved small businesses.

“All of these tools mean more competition and broader economic growth. These benefits could be enhanced through policies that keep pace with innovation and meet the needs of today’s consumers and commerce. My written testimony contains a number of common sense policy proposals for the Committee’s consideration. I will briefly mention several:

  1. Create an optional national money transmission license. Payment innovators currently are regulated under a fractured regime in nearly every state. An optional national license would offer consistent safeguards, and it would enhance innovation and consumer access to new payment options – evenly across the country.
  2. Update the Card Act to include oversight of card network rules and their impact on consumer choice and access to
  3. Restore the “valid when made” principle. FIN thanks the Committee for passing the Protecting Consumers’ Access to Credit Act, introduced by Congressman McHenry and Meeks.
  4. Support the good institutional work of financial regulators to better address technology, such as the OCC’s Office of Innovation and the CFPB’s Project Catalyst.

 

“Financial Innovation Now thanks the Committee for the opportunity to testify and we look forward to working with you towards a better financial services system. Thank you.”

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