Fintech Takes Bank Nerd Corner: The "Would You Rather?" of Fintech Regulation
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Mar 12, 2025 Michael Hsu, former Acting Comptroller of the Currency, joins the discussion, blending his regulatory expertise with a playful 'Would You Rather' game. They tackle key questions like the trade-offs between high-risk bank formations versus Banking as a Service. The conversation also delves into the necessity of either robust industry standards or direct oversight for consumer protection. Lastly, they explore the potential impact of stablecoins and the relevance of the Community Reinvestment Act in today's banking landscape. Tune in for a fun yet informative ride through fintech regulation!
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De Novo vs. BaaS
- De novo bank formation declined after the Great Recession, while fintechs using Banking as a Service (BaaS) rose.
- This presents a trade-off between fostering new bank creation and enabling fintech innovation through BaaS.
Banking and Trust
- The US needs diverse banking for diverse communities, balancing safety, innovation, competition, and a level playing field.
- Trust is key, especially in dynamic environments.
Risk Appetite and De Novo Formation
- Jurisdictions with higher risk appetites see more de novo bank formation due to different failure rates.
- The US needs broader consensus on acceptable failure rates for healthier bank competition.