Key Learnings from the LEND360 State Listening Session
By: Michael Day, LEND360
While a significant focus at this year’s LEND360 was on policy at the federal level, I had the opportunity to lead a very interesting listening session examining the innovative work taking place in our state capitals. LEND360 has long recognized the important role states play in growing the industry but this discussion was especially key given the fact that in the past year almost a third of the states have enacted over 20 new laws impacting the fintech industry. From loan caps and licensing to enhanced reporting and regulatory requirements there has been a huge amount of change in lending at the state level.
It was with this backdrop that I was joined by Bryan A. Schneider, Secretary of the Illinois Department of Financial and Professional Regulation. Bryan brings a unique perspective to the discussion on financial service policy, not just as a state regulator, but someone with over a decade and half real-life business experience. The nearly hour-long discussion provided a chance to exchange ideas and engage a key state regulator. A significant focus of the morning was the need to look at this issue from both a consumer and a regulated entities perspective. Some other important observations on the current state regulatory front from the listening session found:
* The need to create reciprocity among states;
* Efforts to harmonizing state laws would be a big help;
* Licensing that works in multiple states is needed;
* The development of products for use in multiple states should be considered.
These topics lead to some very interesting discussion on efforts at the state level to re-engineer the existing regulatory frameworks to support the rapidly changing financial services landscape. A potential vehicle touted for these reforms is the Nationwide Multistate Licensing System and Registry (NMLS). As many may recall, NMLS was developed as a way to license and monitor mortgage loan originators across state lines. However, it is now being examined as a vehicle to better coordinate and share information, providing a more streamlined regulatory landscape beyond the mortgage process.
While the focus of the listening session was on policy at the state level, we were able to hear a state regulators perspective on the federal system and, in particular, a national charter. While the discussion revolved around the OCC fintech charter proposal, it provided the opportunity to hear the benefits and challenges of a national charter from a state regulator’s perspective. One thing that was very clear, state regulators plan to continue playing a major role when it comes to the evolution of banking service. To support these endeavors the Conference of State Bank Supervisors (CSBA) has developed “Vision 20/20,” aimed at working with the fintech industry. Vision 20/20 holds some great potential to supercharge innovation at the state level and it’s exciting to hear about some of those plans going forward.
The listening session allowed a rare opportunity to engage a key policy player and exchange ideas for creative solutions for the next generation of financial service products. The session highlighted how many states are serving as incubators and developing new ideas on ways to reshape our lending markets. This will be particularly key as the fintech community looks for new ways to provide consumers with a full compendium of lending solutions. Moving forward it will take a coordinated effort and what we learned through the state listening session at this year’s LEND360 was just a few of the ways states are set to play an integral role in the growth of the industry.