The lending market has seen a significant shift from traditional financial institutions to fintech companies providing alternative business lending. Fintech companies are changing the brick-and-mortar landscape of lending by utilizing data and technology. Here are four ways fintech has changed the lending process and how traditional financial institutions and lenders can keep up: 1. They introduced alternative lending models In a traditional lending model, lenders accept deposits from customers to extend loan offers to other customers. One way that fintech companies disrupted the lending process is by introducing peer-to-peer lending. With peer-to-peer lending, there is no need to take a deposit at all. Instead, individuals can earn interest by lending to others. Banks who collaborate with peer-to-peer lenders can improve their credit appraisal models, enhance their online lending strategy, and offer new products at a lower cost to their customers. 2. They offer fast approvals and funding In certain situations, it can take banks and credit card providers weeks to months to process and approve a loan. Conversely, fintech lenders typically approve and fund loans in less than 24 hours. According to Mintel, only 30% of consumers find various banking features easy-to-use. Financial experts at Toptal suggest that banks consider speeding up the loan application and funding process within their online lending platforms to keep up with high-tech companies, such as Amazon, that offer customers an overall faster lending process from applications to approval, to payments. 3. They\'re making use of data Typically, fintech lenders pull data from several different alternative sources to quickly determine how likely a borrow is to pay back the loan. The data is collected and analyzed within seconds to create a snapshot of the consumer\'s creditworthiness and risk. The information can include utility, rent. auto payments, among other sources. To keep up, financial institutions have begun to implement alternative credit data to get a more comprehensive picture of a consumer, instead of relying solely upon the traditional credit score. 4. They offer perks and savings By enacting smoother automated processes, fintech lenders can save money on overhead costs, such as personnel, rent, and administrative expenses. These savings can then be passed onto the customer in the form of competitive interest rates. While traditional financial institutions generally have low overall interest rates, the current high demand for loans could help push their rates even lower. Additionally, financial institutions have started to offer more customer perks. For example, Goldman Sachs recently created an online lending platform, called Marcus, that offers unsecured consumer loans with no fees. Financial institutions may feel stuck in legacy systems and unable to accomplish the agile environments and instant-gratification that today\'s consumers expect. However, by leveraging new data sets and innovation, financial institutions may be able to improve their product offerings and service more customers. Looking to take the next step? We can help. Learn More About Banks Learn More About Fintechs
While it’s a word that has only recently made its way into financial circles, consumers and businesses alike have been enjoying life in a platform world. Digital platforms connect riders with drivers, friends with family, manufacturers with buyers and sellers, and the list goes on. Digital platforms are technology-enabled business models that work to enhance efficiency, flexibility, scalability, integration, and ultimately user engagement. They’re integral to the operation and success of some of the most valuable companies in the world, including Google, Facebook, and Amazon. While digital platforms have made their way beyond high-tech to other industries, like supply chain management and logistics, financial institutions have fallen behind. The reasons why are understandable: a quickly evolving marketplace, regulatory induced risk aversion, and the need to protect data and privacy. Most of the digital platform adoption that has occurred in the financial industry has revolved around open banking, with a focus on enriching the customer experience. BBVA, for instance, recently launched a platform to enable their business clients to use white-labeled versions of BBVA products and services on-demand. But the value of digital platforms for the financial industry can go beyond how the consumer interfaces with his or her bank or credit union. Financial institutions could see the same efficiency, flexibility, and integration benefits by implementing technology platforms into their internal systems. Traditionally, financial institutions have used contrasting technology and systems across their customers’ lifecycle. From financial marketing and targeting, to acquisition and underwriting, there is ample opportunity to streamline and integrate these systems by adopting a platform architecture. The most future-forward platforms not only enable financial institutions to integrate their internal systems, but they also allow companies to seamlessly integrate their customer data with third-party data resources. The powers of data-driven answers combined with platform technology can help overcome business challenges and satisfy consumer and client demands. Is it time you and your company stepped up to the platform?
Although half of businesses globally report an increase in fraud management over the past 12 months, many still experience fraud losses and attacks. To help address these challenges, Experian held its first-ever Fintech Fraud & Identity Meetup on February 5 in San Francisco, Calif. The half-day event was aimed at offering insights on the main business drivers of fraud, market trends, challenges and technology advancements that impact identity management and fraud risk strategy operations. “We understand the digital landscape is changing – inevitably, with technology enhancements come increased fraud risk for businesses operating in the online space,” said Jon Bailey, Experian’s Vice President of Fintech. “Our focus today is on fraud and identity, and providing our fintech customers with the tools and insights needed to grow and thrive.” The meetup was attended by number of large fintech companies with services spanning across a broad spectrum of fintech offerings. To kick off the event, Tony Hadley, Experian’s Senior Vice President of Government & Regulatory Affairs, provided an update on the latest regulatory news and trends impacting data and the fintech space. Next followed a fraud and identity expert panel, which engaged seasoned professionals in an in-depth discussion around two main themes 1) fraud trends and risk mitigation; and 2) customer experience, convenience, and trust. Expert panelists included: David Britton, Experian’s Vice President of Industry Solutions; Travis Jarae, One World Identity’s Founder & CEO; George Kurtyka, Joust’s Co-Founder & COO; and Filip Verley, Airbnb’s Product Manager. “The pace of fraud is so fast, by the time companies implement solutions, the shelf-life may already be old,” Britton said. “That is the crux – how to stay ahead. The goal is to future-proof your fraud strategy and capabilities.” At the close of the expert panel, Kathleen Peters, Experian’s Senior Vice President Head of Fraud and Identity, demoed Experian’s CrossCore™ solution – the first smart, open, plug-and-play platform for fraud and identity services. Peters began by stating, “Fraud is constant. Over 60% of businesses report an increase in fraud-related losses over the past year, with the US leading the greatest level of concern. The best way to mitigate risk is to create a layered approach; that’s why Experian invented CrossCore.” With the sophistication of fraudsters, it’s no surprise that many businesses are not confident with the effectiveness of their fraud strategy. Learn more about how you can stay one step ahead of fraudsters and position yourself for success in the ever-changing fraud landscape; download Experian’s 2019 Global Identity and Fraud Report here. For an inside look at Experian’s Fintech Fraud & Identity Meetup, watch our video below.
2018 was a whirlwind of a year – though it was not surprising when Google’s 2018 “most-searched” list showed Fornite GIFs ruled the internet, Black Panther was the most-Googled movie, and the Keto diet was trending (particularly in late December and early January, go figure). But, while Google’s most-searched terms of 2018 present pure pop-culture entertainment, they miss the mark on the trends we find most meaningful being principals of the financial services industry. What about the latest news in fintech? According to Business Insider, fintech companies secured $57.9 billion in funding in the first half of 2018 alone, nearing the previous annual record of $62.5 billion set in 2015. Taking it a step further, CBInsights reports that 24 of 39 fintech unicorns are based in North America. We won’t blame Google for this oversight. Faced with the harsh reality that the “most-searched” results are based on raw-data, perhaps it’s possible that people really do find Fortnite more exciting than financial services trends – but not us at Experian. We have been closely following disruption in the financial services space all while leading the charge in data innovation. When competing in environments where financial institutions vie for customer acquisition and brand loyalty, digital experience is not enough. Today’s world demands finance redefined – and fintechs have answered the call. Fintechs are, by far, among the most innovative technology and data-driven companies in the financial services industry. That’s why we built a team of seasoned consultants, veteran account executives and other support staff that are 100% dedicated to supporting our fintech partners. With our expert team and a data accuracy rate of 99.9%, there isn’t a more reliable fintech source. Perhaps this is one financial services trend that Google can’t ignore (we see you Google)! For more information regarding Experian’s fintech solutions, check out our video below and visit Experian.com/fintech.
How can fintech companies ensure they’re one step ahead of fraudsters? Kathleen Peters discusses how fintechs can prepare for success in fraud prevention.
Picking up where we left off, online fintech lenders face the same challenges as other financial institutions; however, they continue to push the speed of evolution and are early adopters across the board. Here’s a continuation of my conversation with Gavin Harding, Senior Business Consultant at Experian. (Be sure to read part 1.) Part two of a two-part series: As with many new innovations, fintechs are early adopters of alternative data. How are these firms using alt data and what are the results that are being achieved? In a competitive market, alternative data can be the key to helping fintechs lend deeper and better reach underserved consumers. By augmenting traditional credit data, a lender has access to greater insights on how a thin-file consumer will perform over time, and can then make a credit decision based on the identified risk. This is an important point. While alternative data often helps lenders expand their universe, it can also provide quantitative risk measures that traditional data doesn’t necessarily provide. For example, alternative data can recognize that a consumer who changes residences more than once every two years presents a higher credit risk. Another way fintechs are using alternative data is to screen for fraud. Fraudsters are digitally savvy and are using technology to initiate fraud attacks on a broader array of lenders, in bigger volumes than ever before. If I am a consumer who wants to get a loan through an online fintech lender, the first thing the lender wants to know is that I am who I say I am. The lender will ask me a series of questions and use traditional data to validate. Alternative data takes authentication a step further and allows lenders to not only identify what device I am using to complete the application, but whether the device is connected to my personal account records – giving them greater confidence in validating my identity. A second example of using alternative data to screen for fraud has to do with the way an application is actually completed. Most individuals who complete an online application will do so in a logical, sequential order. Fraudsters fall outside of these norms – and identifying these patterns can help lenders increase fraud detection. Lastly, alternative data can help fintech lenders with servicing and collections by way of utilizing behavioral analytics. If a consumer has a history of making payments on time, a lender may be apt to approve more credit, at better terms. As the consumer begins to pay back the credit advance, the lender can see the internal re-payment history and recommend incremental line increases. From your perspective, what is the future of data and what should fintechs consider as they evolve their products? The most sophisticated, most successful “think tanks” have two things that are evolving rapidly together: Data: Fintechs want all possible data, from a quality source, as close to real-time as possible. The industry has moved from “data sets” to “data lakes” to “data oceans,” and now to “data universes.” Analytics: Fintechs are creating ever-more sophisticated analytics and are incorporating machine learning and artificial intelligence into their strategies. Fintechs will continue to look for data assets that will help them reach the consumer. And to the degree that there is a return on the data investment, they will continue to capitalize on innovative solutions – such as alternative data. In the competitive financial marketplace, insight is everything. Aite Group recently conducted a new report about alternative data that dives into new qualitative research collected by the firm. Join us to hear Aite Group’s findings about fintechs, banks, and credit unions at their webinar on December 4. Register today! Register for the Webinar Click here for more information about Experian’s Alternative Data solutions. Don’t forget to check out part one of this series here. About Gavin Harding With more than 20 years in banking and finance Gavin leverages his expertise to develop sophisticated data and analytical solutions to problem solve and define strategies across the customer lifecycle for banking and fintech clients. For more than half of his career Gavin held senior leadership positions with a large regional bank, gaining experience in commercial and small business strategy, SBA lending, credit and risk management and sales. Gavin has guided organizations through strategic change initiatives and regulatory and supervisory oversight issues. Previously Gavin worked in the business leasing, agricultural and construction equipment sectors in sales and credit management roles.
Fintechs seem to be the new Joneses. Everyone’s trying to keep up. I sat down with Gavin Harding, Senior Business Consultant with Experian Advisory Services, to tap into some of his insight on online fintech lenders. What are they doing to push the envelope when it comes to evolving the financial industry. How are they addressing the topics that all lenders have – including strategy, regulations, credit invisibles, etc.? Here’s what he had to say. Part one of a two-part series: Fintechs have their own way of doing things across the financial industry. How is alternative data defined in that space? There are many different definitions of “alt data.” Let’s start with the fundamentals. When we think about “traditional” or “mainstream” data, that typically includes the bureau data that we are all familiar with. Bureau data has been around for a long time and is used extensively throughout the credit and loan lifecycle. This data typically includes a consumer’s credit history, such as a summary of inquiries, tradelines, and balances. But, this information doesn’t necessarily provide a holistic consumer snapshot that allows lenders to fully assess credit and risk. What about the so-called “credit invisibles” with little to no credit history? This is what we mean when we talk about alternative data – within the consumer lending ecosystem, it is anything that is not traditional credit bureau data. Alternative data combined with traditional data allows lenders to expand their universe by reaching underserved markets – which means more access to more credit for more consumers. Let’s briefly discuss three examples: alternative financial services data, transactional data and rental data. Alternative financial services data provides insight into alternative sources of financing that are quickly becoming mainstream. This data set contains small-dollar installment loans, point-of-sale financing, rent-to-own, online installment loans and auto-title lending. Transactional data illustrates how a consumer uses their checking account, or in other words, how many deposits have been accumulated in a month, what is the average deposit, and what bills have been paid from the account. This type of data provides a better picture of a consumer’s financial health and ability to repay. Rental data can serve a similar purpose. Consistent and steady trends of a consumer making good on their rental payment month-after-month, year-after-year, speaks to their ability and intent to pay. If I am a thin-file consumer with limited credit history, alternative data – such as transactional data and rental data – gives the lender more information to make an informed credit decision. Compliance with regulatory requirements is a key concern for any financial institution. What should fintech lenders take into consideration when incorporating nontraditional data into their strategy? Users of alternative data – whether traditional financial institution or fintech – must ensure compliance with applicable lending regulations. To fall under the Fair Reporting Act (FCRA) compliant umbrella, alternative credit data must be displayable, disputable and correctable. Keep in mind, alternative data is often used to augment traditional data to get from a declined credit application, to an approved credit application. Simply put, alternative data is incremental data. As long as fintechs use it in a consistent and compliant way – it works. Always an advocate for new thought leadership, Experian recently sponsored a report conducted by Aite Group. This third-party report about alternative data dives into new qualitative research collected by the firm. Join us to hear Aite Group’s findings about fintechs, banks, and credit unions at their webinar on December 4. Register today! Register for the Webinar Stay tuned for part two of this series. And click here for more information about Experian’s Alternative Data solutions. About Gavin Harding With more than 20 years in banking and finance Gavin leverages his expertise to develop sophisticated data and analytical solutions to problem solve and define strategies across the customer lifecycle for banking and fintech clients. For more than half of his career Gavin held senior leadership positions with a large regional bank, gaining experience in commercial and small business strategy, SBA lending, credit and risk management and sales. Gavin has guided organizations through strategic change initiatives and regulatory and supervisory oversight issues. Previously Gavin worked in the business leasing, agricultural and construction equipment sectors in sales and credit management roles.
There’s no shortage of buzz around fintechs shifting from marketplace challengers to industry collaborators. Regardless of fintech’s general reputation as market disruptors, a case can certainly be made for building partnerships with traditional financial institutions by leveraging the individual strengths of each organization. According to the World FinTech Report 2018, 75.5% of fintechs surveyed selected “collaborate with traditional firms” as their main objective. Whereas fintechs have agility, a singular focus on the customer, and an absence of legacy systems, traditional Financial Institutions have embedded infrastructure, scale, reach, and are well-versed with regulatory requirements. By partnering together, fintechs and other Financial Institutions can combine strengths to generate real business results and impact the customer experience. New stories are emerging – stories that illustrate positive outcomes beyond efforts exerted by one side alone. A recent report sponsored by Experian and conducted by the Filene Research Institute further explores the results of fintech and traditional FI partnerships by examining the experiences of six organizations: The outcomes of these relationships are sure to encourage more collaborative partnerships. And while leveraging each organization’s strength is a critical component, there’s much more to consider when developing a strategic approach. In the fast-moving, disruptive world of fintech, just what are the key elements to building a successful collaboration with traditional Financial Institutions? Click here to learn more. More Info on Marketplace Lending Read the Filene Report
Fintechs take on banks, technology, and finance as we know It. In the credit space, their reputation as a market disruptor precedes their definition. But now, as they infiltrate headlines and traditional finance as many know it – serving up consumer-centric, convenience-touting, access-for-all online marketplace lending – fintechs aren’t just becoming a mainstay within the financial spectrum’s vernacular. With their increasing foothold in the marketplace, they are here and they are gaining momentum. Since their initial entry to the marketplace in 2006, these technology-driven online platforms flaunt big data, actionable analytics and originations growing at exponential rates. Fintechs hang their hats on their ability to be the “anti-bank” of sorts. The brainchild of finance plus technology, their brands promise simple but powerful deliverables – all centered on innovation. And they market themselves as filling in the gaps commonly accepted as standard practices by traditional financial institutions. Think paperwork, less-than-instant turnaround times, a history of unwavering tradition, etc. Fintechs deliver a one-two punch, serving the marketplace as both lending companies and technology gurus – two pieces that financial institutions want and consumers crave. Now, as they grow more prominent within the marketplace, some are starting to pivot to test strategic partnerships and bring their strengths – technological infrastructure, speed and agility – to credit unions and other traditional financial institutions. According to the World FinTech Report 2018, 75.5% of fintechs surveyed want to collaborate with traditional financial services firms. The challenge, is that both fintechs and traditional financial institutions struggle with finding the right partners, efficiently working together and effectively scaling innovation. From competitors to collaborators, how can fintechs and traditional institutions strike a partnership balance? A recent report sponsored by Experian and conducted by the Filene Research Institute, explores this conundrum by examining the experiences of six financial institutions – some fintechs and some traditional FIs – as they seek to collaborate under the common goal of better serving customers. The results offer up key ingredients for fostering a successful collaboration between fintechs and traditional financial institutions – to generate real impact to the customer experience and the bottom-line. Rest assured, that in the fast-moving, disruptive world of fintech, effective partnerships such as these will continue to push boundaries and redefine the evolving financial services marketplace. Learn More About Online Marketplace Lending Download the Filene Report
Unsecured lending is increasing. And everyone wants in. Not only are the number of personal loans increasing, but the share of those loans originated by fintech companies is increasing. According to Experian statistics, in August 2015, 890 new trades were originated by fintechs (or 21% of all personal loans). Two years later, in August 2017, 1.1 million trades belonged to fintechs (making up 36% of trades). This increase is consistent over time even though the spread of average loan amount between traditional loans and fintech is tightening. While convenience and the ability to apply online are key, interest rates are the number one factor in choosing a lender. Although average interest rates for traditional loans have stabilized, fintech interest rates continue to shift higher – and yet, the upward momentum in fintech loan origination continues. So, who are the consumers taking these loans? A common misconception about fintechs is that their association with market disruption, innovation and technology means that they appeal vastly to the Millennial masses. But that’s not necessarily the case. Boomers represent the second largest group utilizing fintech Marketplace loans and, interestingly, Boomers’ average loan amount is higher than any other generational group – 85.9% higher, in fact, from their Millennial counterparts. The reality is the personal loan market is fast-paced and consumers across the generational spectrum appear eager to adopt convenience-based, technology-driven online lending methods – something to the tune of $35.7 million in trades. For more lending insights and statistics, download Experian’s Q2 2018 Personal Loans Infographic here. Learn More About Online Marketplace Lending Download Lending Insights
Big Data is no longer a new concept. Once thought to be an overhyped buzzword, it now underpins and drives billions in dollars of revenue across nearly every industry. But there are still companies who are not fully leveraging the value of their big data and that’s a big problem. In a recent study, Experian and Forrester surveyed nearly 600 business executives in charge of enterprise risk, analytics, customer data and fraud management. The results were surprising: while 78% of organizations said they have made recent investments in advanced analytics, like the proverbial strategic plan sitting in a binder on a shelf, only 29% felt they were successfully using these investments to combine data sources to gather more insights. Moreover, 40% of respondents said they still rely on instinct and subjectivity when making decisions. While gut feeling and industry experience should be a part of your decision-making process, without data and models to verify or challenge your assumptions, you’re taking a big risk with bigger operations budgets and revenue targets. Meanwhile, customer habits and demands are quickly evolving beyond a fundamental level. The proliferation of mobile and online environments are driving a paradigm shift to omnichannel banking in the financial sector and with it, an expectation for a customized but also digitized customer experience. Financial institutions have to be ready to respond to and anticipate these changes to not only gain new customers but also retain current customers. Moreover, you can bet that your competition is already thinking about how they can respond to this shift and better leverage their data and analytics for increased customer acquisition and engagement, share of wallet and overall reach. According to a recent Accenture study, 79% of enterprise executives agree that companies that fail to embrace big data will lose their competitive position and could face extinction. What are you doing to help solve the business problem around big data and stay competitive in your company?
At Experian, innovation is at the heart of our culture. We strive for continuous improvement, from finding new ways to better use data to identifying ways to make access to credit faster and simpler for millions of people around the world. So we are especially proud that one of our latest innovations—Text for Credit—was recognized by FinTech Breakthrough, an organization that highlights the top companies, technologies and products in the global FinTech market. The Innovation Award for Consumer Lending comes in a year of significant innovation milestones for Experian. In addition to introducing Text for Credit, we’ve partnered with Finicity, and also created a more open and adaptive technology environment by implementing API capabilities across the Experian network. We recently introduced Text for Credit, the first credit solution that enables consumers to apply for credit with a simple text message. Using mobile identification through our Smart Lookup process, consumers can be recognized by their device credentials, bypassing the need to fill out a lengthy credit application. Our Text for Credit product enables consumers to apply for real-time access to credit while standing in line to make their purchases, or before entering an auto dealership. This recognition as an innovator is a testament to our employees’ focus on putting the consumer and our customers at the center of what we do, and powering innovative opportunities to secure better, more productive futures for people and organizations. What’s next We are also exploring other opportunities to make the consumer experience more convenient. As we’re becoming a keyboard-less society, we’re looking at the next frontier: voice technology. The progression to voice-activated services has started already using voice commands through Amazon Alexa and Google Home-enabled devices. And while voice technology is still in its infancy, it’s not a tremendous leap to envision being able to use voice commands to access lines of credit in a store, like Text for Credit now. Experian DataLabs is exploring many possibilities for voice-activated credit, using several different devices—more than just via phone. As technology innovators, our greatest challenge is determining which potential solutions to pursue. It comes down to a simple equation: the magnitude of impact a new application may have, plus its probability of success. So far, we’ve found plenty of options that satisfy both criteria—and our curiosity, too. With technology, machine learning and ever-smarter applications of big data, we can deliver intriguing and convenient experiences to shoppers in ways we never imagined a decade ago. Predicting the future has never been this much fun.
In just a few short hours, Vision attendees immersed themselves into the depths of the economy, risk models, specialty finance data, credit invisibles, student loan data, online marketplace lending and more. The morning kicked off with one of the most respected and trusted macroeconomists in the U.S., Diane Swonk. With a rap sheet filled with advising central banks and multinational companies, Swonk treated a packed house to a look back on what has transpired in the U.S. economy since the Great Recession, as well as launching into current state and speculating on the months ahead. She described the past decade not as “lost, but rather lagging.” She went onto to say this past year was transitional, and while markets slowed slightly during the months leading up the U.S. presidential election, good things are happening: We’ve finally broken out of the 2% wage rut Recruiting on college campuses has picked up The labor force is growing Debt-to-income levels have returned to where they were prerecession and Investment is coming back. “I believe we’ll see growth over 2% this year,” said Swonk. Still, change is underway. She commented on how the way U.S. consumer spending is changing, and of course we’re seeing a restructuring in the retail space. While JC Penney announces store closings, you simultaneously see Amazon moving from “click to brick,” dabbling in the opening of some actual storefronts. Globally, she said the economy is the strongest it has been in eight years. She closed by noting there is a great deal of political change and unrest in the world today, but says, “Never underestimate our abilities when we tap our human capital.” -- More than 100 attendees filled a room to hear about the current trends and the future of online lending with featured guests from Oliver Wyman, Marlette Funding and Lending USA. While speakers commented on the “hiccup” in the space last year with some layoffs and mergers, volume has continued to double every year for the past several years with roughly $40 billion in cumulative originations today. Panelists discussed the use of alternative data to decision, channel bias, the importance of partnerships and how the market will see fewer and fewer players offering just one product specialty. “It is expensive to acquire customers, so you don’t just want to have one product to sell, but rather a range,” said Sharat Shankar of Lending USA. -- The numbers in the student lending universe are astounding. In a session focused on the U.S. student loan market, new Experian data reveals there is $1.49 billion in total student loan outstandings. In fact, total outstandings have grown 21% over the past four years, while the number of trades have only grown 4%. Costs are skyrocketing. The average balance per trade has grown 17% over the past four years. “We don’t ration education in this country,” said Joe DePaulo of College Ave. Student Loans. “We give everyone access to liquidity when it comes to federal student loans – and it’s not like that in other countries.” While DePaulo notes the access is great, offering many students the opportunity to obtain higher education, he says the problem is with disclosures. Guardians are often the individuals filling out the FAFSA, but the students inherit the loans. Students, he says, rarely understand how much their monthly payment will ultimately be after graduation. For every $10,000 in student loans, he says that will generally equate to a $100 monthly payment. -- Tomorrow, Vision attendees will be treated to more breakout sessions and a concluding keynote with legendary quarterback Tom Brady.
Investors and financial institutions continue to invest in fintech to help meet the dynamic expectations of consumers who want fast, easy and hassle-free access to new financial products and services. Just last week, in his annual letter to shareholders, JP Morgan Chase CEO Jamie Dimon noted that the bank has invested approximately $600 million “on emerging fintech solutions – which include building and improving digital and mobile services and partnering with fintech companies.” Meanwhile, policymakers in Washington continue to grapple with how to spur responsible innovation and how fintech fits into the existing regulatory paradigm. The Office of the Comptroller of the Currency (OCC) continues to move forward with the development of a special purpose national charter for fintech lenders. On March 15, the OCC issued a draft supplement to its existing Licensing Manual that describes how the agency “will apply the licensing standards and requirements in its existing regulations and policies to fintech companies applying for a special purpose national bank charter.” The draft manual, which is open for a 30-day public comment period ending April 14, 2017, would prohibit fintech lenders from offering products “with predatory features” or entities that inappropriately mingle banking and commerce. The agency also defended its legal authority to make the move without a new law from Congress or any formal rulemaking process, saying it’s doing nothing more than expanding a longstanding practice. At the same time, a group of House Republicans, led by House Financial Services Committee Chairman Jeb Hensarling (R-Tex.), has asked Comptroller of the Currency Thomas Curry to slow down plans to grant special charters to fintech firms. In the letter, the lawmakers state that OCC should provide “full and fair opportunity” for public comment on standards for granting fintech charters and allow President Trump’s pick for the next comptroller to weigh in. The lawmakers go on to say that if OCC “proceeds in haste” to create new limited-purpose charter for fintech, Congress will examine the agency’s actions and “if appropriate, overturn them.” The issue will likely continue to bubble under the surface as Congress and the Trump Administration tackle larger issues such as tax reform, infrastructure spending and possibly wider financial services reform. However, the fintech charter is a legacy item for Comptroller Curry and he is likely to seek to move this to closure given that his term expires at the end of April (although he would remain in place until President Trump nominates and confirms his replacement).
Experian shares five trends and twists coming over the next 12 months, that could push new boundaries and in many cases improve the customer experience as it pertains to the world of credit and finance.