Just days before President Obama will leave office, the White House released a white paper advocating for the U.S. government to engage in efforts to promote the fintech industry.
In the document titled “A Framework for Fintech,” which was published Sunday, the National Economic Council — an arm of the White House — laid out broad objectives and provided a series of recommendations to policymakers and regulators to foster the industry’s growth.
“The United States remains the global leader in fintech as measured by total investments,” said the white paper. “However, the U.S. leadership position in fintech should not be taken for granted.”
The document’s release followed a summit the White House hosted for fintech stakeholders in June. The new framework did not offer up any specific policy recommendations, but it outlined 10 guiding principles for policymakers grappling with the fast-growing industry. These included the importance of consumer protection, promoting financial inclusion, overcoming technological bias, protecting financial stability and building cybersecurity measures.
“This administration is proud of the hard work undertaken by federal agencies to support innovation and engage with the fintech industry, while also recognizing that there is more work to do,” the white paper said.
“Policymakers and regulators should continue engaging with the private sector to foster innovation in fintech while protecting consumers, businesses, and the financial system.”
The paper advocated for a “21st century financial regulatory framework,” advising financial regulators to modernize how they engage with the industry. Regulators should rely on “data-driven analysis,” be open to using technology themselves and be flexible with how they engage with the industry, the White House said. The paper commended initiatives like the Consumer Financial Protection Bureau’s Project Catalyst, and the Office of the Comptroller’s “Responsible Innovation” initiative.
The NEC suggested that policymakers also take inspiration from the United Kingdom’s efforts to promote financial innovation — which includes a regulatory sandbox option for fintech companies — as well as efforts undertaken by Singapore.
However, the white paper also warned that regulators and fintech companies should be careful to mitigate the risks associated with the fast-growing industry.
“While fintech represents only a small part of the wider financial services sector at present, policymakers, regulators, and industry should collaborate to identify and mitigate potential systemic risks as the industry grows,” the NEC said.
The white paper also applauded the development of new technologies in specific areas such as remittances and access to capital for individuals and small businesses.
“Policymakers and regulators must consistently endeavor to understand these new technologies in order to support innovation in furtherance of important policy objectives,” the paper said. “They must also work collaboratively with fintech innovators to mitigate potential risks.”