A focus on “innovation” – through the creation of a separate department – is on the radar for yet another federal financial institution regulatory agency, this time the regulator of credit unions and with a particular emphasis on financial technology firms (fintechs).
NCUA Board Chairman Rodney Hood said Tuesday he “would very much like to create an Office of Innovation and Access at NCUA” during an on-line session hosted by the National Association of Federally Insured Credit Unions (NAFCU) a credit union trade group. He indicated that the department would give the agency tools and the ability to “learn from industry practitioners” to help low-income consumers to (among other things) use credit data and receive smartphone-based financial education.
Hood asserted that even before the coronavirus crisis erupted that credit unions were already “partnering” with fintechs, and “I want to harness that and leverage it so it can be shared with even more folks,” he said.
Other federal financial institution regulators have shined a spotlight on innovation over the last three years. In particular, in October 2018 the Federal Deposit Insurance Corp. (FDIC) announced it was setting up an “Office of Innovation,” to be guided by a new Chief Innovation Officer (CINO) at the agency, who would also oversee a new tech lab (known as FDIC Technology Office, or FDITech). The purpose of the innovation office, according to the agency, is to partner with banks and non-banks to understand the effects of technology on the business of banking. To date, the agency has not named a CINO to head the office.
The FDIC followed the lead of two other regulators to set up innovation offices or programs. The OCC announced its “responsible innovation” initiative in the fall of 2017; the CFPB announced its innovation office in July 2018.
Other recent actions taken, and the dates announced for them, by the regulators with regard to innovation include:
November 2019: FDIC announces it will take public comments on its plan to initiate a new information collection that will support a planned innovation pilot program framework. The information collection, the agency said, “seeks to engage and collaborate with innovators in the financial, non-financial, and technology sectors to, among other things, identify, develop and promote technology-driven innovations among community and other banks in a manner that ensures the safety and soundness of FDIC-supervised and insured institutions.”
October 2019: The FDIC, Office of the Comptroller of the Currency (OCC), Commodity Futures Trading Commission (CFTC), and Securities and Exchange Commission (SEC) all announced they had joined the Global Financial Innovation Network (GFIN), which is described as a global network of regulators and other organizations focused on financial innovation “in the interests of consumers.” The Consumer Financial Protection Bureau (CFPB), in the previous year, announced it was participating in a global initiative to create the GFIN. It was one of the group’s 11 founding members.
May 2019: The OCC announces its “Innovation Pilot Program” aimed at testing novel or innovative products, services, processes and other activities by financial institutions.