The Conference of State Bank Supervisors (CSBS) and its Fintech Industry Advisory Panel created a plan back in 2017 to develop a consistent framework for regulating non-bank entities across states. They called it Vision 2020. And as 2020 starts to sneak up on us at what seems to be a rapid pace, the momentum continues towards this common goal.
Most recently, the scales have tipped in favor of a more streamlined approach to money transmitter licensing as 23 states have now joined a multistate licensing agreement for financial services companies, according to the press release.
As previously reported on from a PF perspective, money transmitter licensing is one of the biggest challenges looking to be addressed with the Vision 2020 initiative. As it stands now, all 50 states stand to have their own set of approval requirements when it comes to licensing, so having one company attempt approval in multiple states, with multiple review processes required, can prove extremely inefficient and cumbersome.
One solution thus far came from this licensing agreement, which CSBS announced last year and which initially included seven states. Participants in the pact agree to accept the others’ findings on certain elements of the licensing application.
“The collaboration among these 23 states has significantly streamlined the licensing process for participating companies, explains Charlie Clark, director of the Washington State Department of Financial Institutions, in the same press release. “We look forward to more states joining. This is a new era in the state system where we are not only coordinating but actively relying on our fellow regulators to safely bring new financial service products to our citizens.”
In a statement to the House Committee on Financial Services’ Task Force on Financial Technology this week, Clark explained the important role state financial regulators have in regulating fintechs as they have unique insight into the activities of these companies, with a true understanding of what makes them successful in the local marketplace.
“The current intersection between financial services and technology has accelerated change in the industry and for the state system. With industry participation, we are leveraging technology and data to create a more networked system of state regulation that functions more efficiently, with stronger consumer protections,” he said.
So while the process seems to be a considerable one, the momentum seems to be going in a favorable direction for fintechs.