16
SENATE EXAMINES
FINTECH AT
COMMITTEE HEARING
e U.S. Senate Committee on
Banking, Housing, and Urban Affairs held
a hearing entitled "Evaluating the Fintech
Landscape" on September 12, which included
witnesses Lawrence Evans, Director of
Financial Markets at the U.S. Government
Accountability Office; Eric Turner, Research
Analyst at S&P Global Market Intelligence;
and Frank Pasquale, Professor of Law at the
University of Maryland's Francis King Carey
School of Law. Each witness examined one of
the fastest growing industries in the U.S.
FinTech, or financial technology, had close
to $13 billion invested in it in 2016 from U.S.
based companies alone. Turner said, in many
ways, FinTech is a new name for old ideas but
is useful to define emerging subsectors of the
industry that will provide the most benefits
to consumers and the entirety of the financial
sector.
Despite the many advantages FinTech may
offer, there are uncertainties surrounding data
and security that need to be addressed. In light
of the recent Equifax data breach, regulation is
one of the many ways that consumers and the
financial system can be safeguarded, according
to Sen. Mike Crapo (R-Idaho).
"Other governments are exploring options
such as a regulatory sandbox approach that
encourages innovation by allowing firms to
test products and services in a supervised
environment," Crapo said.
FinTech allows digital lenders to offer
competitive rates due to automation and lack
of physical offices. Turner and S&P Global
Market Intelligence's estimates show that 13 of
the largest digital lenders in the U.S. originated
$28.39 billion in loans last year and a cumulative
$68.75 billion since their respective inceptions.
However, in the approval process, the lack of
human interaction causes some borrowers to be
denied who otherwise wouldn't be.
"We need regulation to help consumers
recognize the perils of the new information
landscape without being overwhelmed with
data," Pasquale said. "e right to be notified
about the use of one's data and the right to
challenge and correct errors is fundamental."
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