A Framework for FinTech

At the White House FinTech Summit in June 2016, Cabinet Secretaries and senior officials from across the Administration engaged with stakeholders about the potential for fintech to further myriad policy goals, including small business access to capital, financial inclusion and health, domestic growth, and international development.  At the same event, industry and other stakeholders conveyed the need for a framework that articulates the U.S. government’s perspective on fintech.  Today, after sustained stakeholder engagement, we are proud to publish a whitepaper, A Framework for FinTech, that takes our work one step further to provide that perspective.  This whitepaper expresses the forward-leaning posture of this Administration to innovation and entrepreneurship, generally, and fintech in particular.    

Policy Objectives and FinTech Principles

This document sets forth Administration policy objectives that reflect widely-shared values and practical expectations for the financial services sector and the U.S. government entities that interact with the sector.  It then provides ten overarching principles that constitute a framework policymakers and regulators can use to think about, engage with, and assess the fintech ecosystem in order to meet these policy objectives.  Similarly, industry and other stakeholders can use the framework to understand how they can contribute to a well-functioning and inclusive financial system, and to examine their products and services against articulated principles.

The ten principles encourage stakeholders to:

1. think broadly about the financial ecosystem;
2. start with the consumer in mind;
3. promote safe financial inclusion and financial health;
4. recognize and overcome potential technological bias;
5. maximize transparency;
6. strive for interoperability and harmonize technical standards;
7. build in cybersecurity, data security, and privacy protections from the start;
8. increase efficiency and effectiveness in financial infrastructure;
9. protect financial stability; and
10. continue and strengthen cross-sector engagement.

Federal Government Engagement

Federal policymakers and regulators have accomplished a lot in the fintech space.  Executive agencies across the government – including the Department of Commerce (Commerce), the Small Business Administration (SBA), the Department of State (State), the Department of the Treasury (Treasury), the U.S. Agency for International Development (USAID), and others – and independent regulators have engaged with stakeholders across the industry through events, Requests for Information (RFIs), whitepapers, technical assistance and research, and informal outreach and conversations, to better understand the industry and determine the appropriate role for government in fintech development.  The White House FinTech Summit, the Office of the Comptroller of the Currency’s (OCC) Responsible Innovation initiative, the Consumer Financial Protection Bureau’s (CFPB) Project Catalyst, the Securities and Exchange Commission’s (SEC) Fintech Working Group, Commerce’s Open for Innovation events, Treasury and USAID’s Financial Inclusion Forums, and Treasury’s whitepaper, Opportunities and Challenges in Online Marketplace Lending, are just a few examples.

The Road Ahead

Significant work remains, however.  The United States should continue developing a policy strategy that helps advance fintech and the broader financial services sector, achieve policy objectives where financial services play an integral role, and maintain a robust competitive advantage in the technology and financial services sectors to promote broad-based economic growth at home and abroad.

Additionally, policymakers, regulators, and the private sector should continue engaging with one another to foster innovation in fintech while protecting consumers and the financial system.  This whitepaper is both a product of ongoing public-private cooperation and a roadmap for future collaboration.  As the fintech ecosystem continues to evolve, this statement of principles should serve as a resource to guide the development of smart, pragmatic, and innovative cross-sector engagement.

Adrienne Harris is a Special Assistant to the President for Economic Policy. Alex Zerden is a Presidential Management Fellow.