LendIt USA: the British are coming
Fintech is developing a distinctly British accent and the US is in danger of losing out, according to remarks made by Congressman Patrick McHenry, a member of the House Financial Services Committee, at the LendIt USA conference in New York.
McHenry also focused on the potential of innovation in financial services in the US.
Praising the progressive approach of the UK regulators in supporting fintech and citing initiatives like the regulatory sandbox, he lamented the challenges of the regulatory framework in the US.
He shared his view that regulation is not keeping pace with the rate of technological innovation and that the complexity and barriers to entry thrown up by the US regulatory regime may have a dampening effect on the growth of fintech. A sector, he claimed, in which the US should be world leading.
The real world impact of not sufficiently supporting fintech companies is the creation of “capital deserts” in particular parts of urban and rural areas. This, he noted, was evidenced by the fact that the percentage of small business loans have fallen from being a majority of bank’s balance sheets to less than 20% and in many small counties, it had fallen even further and faster.
Innovative lenders should be reaching out beyond the major cities and be given the regulatory space to create products and services that cans serve “Main Street USA”. To that end, McHenry urged fintech firms to actively engage with legislators and support legislation that better supports innovation.
That said, it became clear that the shadow of the financial crisis looms large when discussing financial innovation and the need for a more supportive regulatory and legislative environment.
Other policy makers speaking at the conference felt that regulation needed to be technology agnostic and were skeptical that new business models underpinned by new technologies were necessarily going to deliver better consumer outcomes.
Current regulation could appropriately deal with innovation. That said, it was noted by one participant that the Senate Banking committee hadn’t held a meeting on fintech since 2014 and that was to discuss blockchain.
By Lisa Moyle, director of strategy, fintech, FinTech Futures Series (Banking Technology’s sister company)
What else’s been going on at LendIt USA? Read our highlights here.