Fintech Firms Dominating Banking, the Feds are Scared

A subtle feud is gradually emerging between banks and fintech companies in the United States as the government contemplates offering the latter firms restricted fed tools as do banks.

Want in? Take Responsibility

The plan to offer fintech firms in the United States access to restricted financial infrastructure is part of the elaborate project of President Donald Trump to boost growth in small businesses while encouraging development and job growths technologically across the country.
However, offering bank-like licenses to fintech firms while not being held to the same strict regulations that banks and federal institutions are subjected to is enough to irk federal bank officials. The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC)which are the bodies considering discharging these licenses are now gradually getting opposed by Fed officials who are requesting that fintech firms be subjected to the same responsibility and regulation as do banks.
Fed officials fear that fintech firms such as OnDeck Capital Inc (ONDK.N), Kabbage Inc. and even cryptocurrency payment company, Ripple, whose stock is steadily rising, all lack the risk-management checks and elaborate consumer protection that banks have. James Bullard, President of St. Louis Reserve Bank, complained about the dilemma that fintech firms were currently enforcing. He said of the fast-rising competition:

“They probably do want access to the payments system, but they don’t want the regulation that would come with that access. I am concerned that fintech will be the source of the next crisis,” he added.

On the other hand, the firms in question have voiced out that it would be practically useless to invest in the country nationwide without having access to the payment systems, settlement services, and other Fed tools that banks are privileged with. If they were going to expand into different regions in the country, creating jobs and facilitating development; then it is only right they are considered in the same privileged light as banks in the US.

The U.S. Trying to Channel Fintech’s Exponential Growth

Fintech companies such as giant Paypal and LendingClub Corp have millions of users between them, and statistics show that at least half of the country now prefers the convenience of the payment services such as Paypal than subscribing to bank services. The rate of growth of these type of firms—which has shot to more than 3000 in the country just between 2010 and 2017—is fast unsettling some banks and officials. Raphael Bostic, Atlanta Fed President, talked about the rapid rise of financial-technology companies in the city but is doubtful the firms light regulation would be a positive in the future.

“Atlanta’s trying to be a fintech hub, so I get the opportunity to talk to a lot of entrepreneurs in this space,” he said. “Almost none of them has risk at the top of what they’re thinking about, and that makes me nervous.”

Related posts
BitcoinBitcoin NewsbtcusdBTCUSDCBTCUSDTETFNewsxbtusd

Bitcoin May Never Go Below $50k Once An ETF Is Approved, Declares On-Chain Analyst

Bitcoin may never drop below $50k asserts on-chain analyst Ki-Young Ju. But as usual, there are conditions that follow this possibility. In a tweet, Ju analyzed that Bitcoin could follow the same path that gold took in 2004 when the first…
BitcoinBitcoin NewsbtcusdBTCUSDCBTCUSDTNewsxbtusd

Quarterback Star Tom Brady Breaks Internet After Showing Interest In Bitcoin

Tom Brady, the American athlete who is widely regarded as the “greatest” quarterback in NFL history is the latest celebrity to show interest in the world’s most valued cryptocurrency Bitcoin. Brady who has a massive Twitter following of 1.9 million…
BitcoinBitcoin NewsbtcusdBTCUSDCBTCUSDTNewsxbtusd

Almost $200 Billion Worth Of Bitcoin Is Currently At Risk – Report Warns

A recently published 2021 crypto report by Opimas LLC, a finance-based management consultancy firm, has revealed that approximately 3,480,000 out of the world’s mined 18.5 million Bitcoin, stands vulnerable to attacks as a result of improper safekeeping. The 36-page report…