Skip to content
CCG Insights

Research Snapshot

  • Research Snapshot

Fintech, Meet Regulation

Fintech, Meet Regulation

Fintech, Meet Regulation

May 19, 2021

By: Kate Drew

As the Covid-19 pandemic prompted customers to flock to digital in the last year or so, fintech startups got a major boost. Adoption of these services soared globally, in many cases, outpacing traditional banking apps, which also saw acceleration in downloads and usage. The increase in activity arrived with great fanfare, spurring big funding rounds, splashy headlines, massive IPOs — and, accordingly, more interest from regulators. In fact, 45% of regulators around the world surveyed by the World Bank and Cambridge Centre for Alternative Finance (CCAF) say that fintech has increased as a priority in light of the Covid-19 pandemic. Another 40% said it remained a high priority, while just 15% reported low or declining prioritization.

The data seems to be bearing out in reality, too. Just a few weeks ago, the Federal Reserve invited comment on proposed guidelines for handling requests for access to Fed services by institutions with “novel types of banking charters.” The central bank said the guidelines reflect a large influx of such applications as well as technological advancement and are designed to create a “transparent and consistent” process for firms looking to access Fed accounts and services. This could be both a positive and a hinderance for the fintech space — on one hand, it will bring standardization to the process to ensure all applications are treated equally, while on the other, it could make it more difficult to access important functions of the Fed, especially its payment services. Meanwhile, digital challenger Chime recently settled a dispute with California regulators over the use of the word “bank” in its marketing materials. Chime provides bank accounts to its customers through its partner banks, The Bancorp Bank and Stride Bank. Like most other challengers in the US, it is not a bank itself. This decision is likely to have its own implications for the industry, as similar fintechs will be encouraged to more clearly define their services before running afoul of regulators.

These are just two recent examples that demonstrate regulators aren’t only exploring the fintech industry anymore; they are starting to get more involved. For traditional banking institutions, it may be tempting to believe increased regulatory oversight on this sector will mollify the fintech threat. That’s a gamble unlikely to payoff. While there may be some initial bumps and bruises, bringing fintech into the regulatory umbrella will probably have the opposite effect long term, making their services more secure and creating greater legitimacy around their brands. The most forward-thinking institutions will be trying to understand what a regulatory environment that includes the fintech industry looks like, and preparing for that future. That could mean collaborating with these players as they build new products and services, or even helping to build with them. It’s important to remember, in jurisdictions where the regulators are active on fintech — think the UK, Singapore etc. — the industry tends to flourish.

–Kate Drew is the Director of Research at CCG Catalyst. Contact her at KateDrew@ccg-catalyst.com or 1-480-744-2240. Follow CCG Catalyst on LinkedIn and Twitter.


Subscribe to CCG Insights.

You Might Like These, Too

BofA Receives First J.D. Power Website Certification

Why Is Active Mobile Banking Use Growth Declining at the Big Three?

Capital One’s Andrew Nash Sees the Industry’s Focus – At Last – Turn to Identity

Capital One’s Andrew Nash Sees the Industry’s Focus – At Last – Turn to Identity

The 101s of Innovation

The 101s of Innovation

Mobile Banking Surge is Here to Stay

Mobile Banking Surge Is Here to Stay

Leaders in Bank Consulting

About CCG Catalyst
Latest Insights
CCG

PHOENIX • NEW YORK • LONDON • SINGAPORE

Phone: +1-480-744-2240  • Contact Us

© 2023 CCG CATALYST CONSULTING. Privacy Policy & Terms of Service.
Request a Call Back
Linkedin Twitter
Subscribe
to our Insights
Subscribe
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent.
Cookie SettingsAccept All
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT
BANK
FINTECH
FUSION
  • About
  • Services
  • Insights
  • Fintech
  • Research
  • Team
  • Contact
  • Press
  • Careers
  • Events
  • RFI / RFP
  • Terms
  • Privacy
Linkedin Twitter Search
Subscribe for Insights

CCG INSIGHTS FOR BANKS, FINTECHS, AND CREDIT UNIONS

The Fed, Real-Time Payments, Alexa and Apple P2P, Part of Payment Revolution
  • Weekly digest of what's new
  • New research snapshots
  • Exclusive access to banking and fintech research
  • Industry news
  • Invitations to webinars and webcasts