Regulatory agencies are like companies: when one gets wind of a market, others are quick to follow. Expect increased regulatory scrutiny of FinTech in all its forms this year, as regulators seek to catch up with digital innovation. The first three of this week’s links show how how the regulatory sector is taking notice in the wake of the LendingClub drama.
New York regulator expands FinTech probe beyond LendingClub
The New York Department of Financial Services awaits the response to its May 17 subpoena of LendingClub in order to determine where to look elsewhere in the alternative lending market for potential wrongdoing, Fortune reports. The NYDFS can then determine whether a lender’s interest rate falls in line with New York’s usury laws, which govern their interest rates, as well as provide the insight needed to establish licensing requirements for online lenders.
Washington steps up FinTech oversight
The Obama administration and regulators have assembled a network of FinTech overseers that the Financial Times reportedly has tracked through briefings from officials, executives and lobbyists, which puts policymakers between a rock and hard place. The government does not want to stifle innovation, but it also has an obligation to protect consumers.
Venmo likely investigated over user privacy violations
PayPal, the parent company of Venmo, disclosed in a recent SEC filing that Venmo is under investigation by the Federal Trade Commission, but it’s unclear yet what exactly landed the company in trouble. According to Fortune, a settlement between the company and the Attorney General of Texas reveals some of the company’s intrusive practices such as making users’ transactions publicly available and sending emails that appear to be from users’ friends.
FinTech is not about disruption. It’s about renovation.
“Those who really thought that FinTech startups could disrupt and replace banks got it all wrong,” writes Roberto Ferrari, general manager of CheBanca! in a post for LinkedIn. If anything, FinTech companies will provide new lifeblood to digital banking by facilitating better, faster collaborations and partnerships, he asserts.
Oracle, Wharton FinTech report: Millennials, an ‘immense opportunity for banks’
“The Millennial Migration: How Banks Can Remain Relevant in Their Decision-Making Eco-System,” a new report by Oracle Financial Services and Wharton FinTech, suggests that because millennials have a higher dependency on mobile banking, bankers should adopt a mobile-first mindset. It also asserts that this generation is more likely than any other to use non-banking options. Catch the summary of the report’s findings at FinTech News.
The rich are already using robo-advisers, and that scares banks
It’s not just Millennials and small investors who are taking advantage of less costly robo-advisers. Now that wealthier investors are looking into the technology, Morgan Stanley, Wells Fargo and others are racing to build their own services similar to BetterMent and Wealthfront, according to Bloomberg. But given that customers want a person to talk to, the introduction of robo-advisers doesn’t necessarily mean traditional brokers are gone for good