In a time of ambiguity, you take notice when there’s unilateral consensus, as was the case at last month’s ThinkTECH Policy Summit. During the summit, assembled regulators, legislators, and community bankers all agreed that community bank innovation — supported by fintech partnerships — will drive the future of financial services.
“Successful innovation is not just about adopting the latest technologies. It involves aligning a bank's strategy with its innovation plans to clearly map a purpose and desired outcome for the adoption of new technology,” Federal Reserve Board Governor Michelle W. Bowman shared with attendees. “…We have seen and are encouraged by many examples of entrepreneurial community banks embracing technological innovation.”
Governor Bowman focused on community bank-fintech partnerships and the innovation they have brought to light, while acknowledging the regulatory hurdles community banks face in identifying the right fintech partners and navigating compliance concerns around those new relationships. On an uplifting note, Governor Bowman announced that the Federal Reserve will be addressing these issues through three key initiatives:
During the ThinkTECH summit, FDIC Chairman Jelena McWilliams also identified the need to remove hurdles to innovation as one of her agency’s top priorities. McWilliams encouraged a modernized supervision process to provide more specific guidance on fintech relationships and ease the burden of implementation, noting the following forthcoming FDIC initiatives:
Complementing the regulatory perspective, in the summit’s closing remarks House Financial Services Committee Artificial Intelligence Task Force Chairman Bill Foster (D-Ill.) spoke to the promise of artificial intelligence in supporting community bank innovation. He emphasized that this new technology offers the potential to enhance the personal strengths of community banks, pointing to a not-so-distant future of “artificial intelligence working side-by-side with traditional relationship banking.”
As we reexamine the role of regulation in today’s rapidly changing financial landscape, there is growing support to marry technology and banking in support of community bank innovation. From Congress to the regulatory agencies, our ThinkTECH Policy Summit demonstrated that removing obstacles to innovation is top priority for regulators, legislators, and community bankers alike.
Michael Emancipator is ICBA vice president and regulatory counsel.