Financial Technology
The FDIC continuously monitors developments in technology to better understand how it may affect the financial industry.
Center for Financial Research
The FDIC’s Center for Financial Research (CFR) encourages, supports, and conducts innovative research on topics that inform the FDIC’s key functions of deposit insurance, supervision, and the resolution of failed banks. CFR researchers produced a number of new and innovative working papers in 2018. Many of these were published in leading banking, finance, and economics journals, and presented in banking and finance seminars at major conferences, regulatory institutions, and universities.
The CFR also developed and maintained many financial models used throughout the FDIC, including off-site models that inform the examination process. CFR economists also provided ongoing support to RMS through on-site examinations.
FDIC Chairman Jelena McWilliams delivers opening remarks at the 18th Annual Bank Research Conference.
In September 2018, the CFR and the Journal of Financial Services Research jointly sponsored the 18th Annual Bank Research Conference. FDIC Chairman Jelena McWilliams kicked-off the conference by highlighting the importance of research in supporting the FDIC’s role in maintaining stability and public confidence in the nation’s financial system. The conference has become a premier forum in its field. Conference organizers received more than 450 submissions for the 26 available presentation slots, and approximately 220 participants attended. Discussion sessions focused on tradeoffs in bank regulation, segmentation of the lending markets, FinTech, and depositor reactions to increased risk at banks, among other things.
In October 2018, the CFR published the Small Business Lending Survey, which presented findings from a nationally representative survey of U.S. banks about their small business lending practices. The report provided new information about the amount of loans that banks extend to small businesses; how banks engage with their small business customers, including start-ups; the competitive environment for small business loans; and how banks of different sizes compete in the small business lending market. Presentations of the findings were made to banking organizations and regulatory agencies, and the full report is available at https://www.fdic.gov/sbls.
FDIC Emerging Technology Steering Committee
The FDIC’s Emerging Technology Steering Committee, supported by two staff-level subcommittees, continues to monitor and assess the various dimensions of emerging technology developments. The committee is comprised of the Directors of RMS, DCP, Division of Insurance and Research (DIR), Division of Resolutions and Receiverships (DRR), and the Office of Complex Financial Institutions (OCFI), as well as the General Counsel, the Chief Risk Officer, and the Chief Information Officer.
In 2018, the Emerging Technology Steering Committee continued work on its established objectives:
- Comprehend, assess, and monitor the current emerging technology activities, risks, and trends.
- Evaluate the projected impact to the banking system, the deposit insurance system, effective regulatory oversight, economic inclusion, and consumer protection.
- Oversee internal working groups monitoring particular aspects of emerging technology.
- Recommend follow-up actions, as appropriate, and monitor implementation; and
- Help formulate strategies to respond to opportunities and challenges presented by emerging technology, and to ensure developments align with regulatory goals.
In May 2018, the FDIC hosted a forum on the Use of Technology in the Business of Banking. The forum brought together a range of stakeholders, including banks, technology firms, financial technology (fintech) firms, trade associations, consumer groups, and other regulators, to explore emerging technology issues, specifically as they relate to the business of banking. The goals of the forum were to better understand emerging technologies that banks are using or considering for future use; gain a deeper understanding of how banks are leveraging (or can leverage) those emerging technologies to seize opportunities for their business and their customers, as well as methods to mitigate risks; and facilitate candid discussion of emerging issues related to the use of financial technology in banking. Panelists represented banks of all sizes, from small community banks to large banks, as well as other firms and organizations involved with emerging technology. Together, they offered a range of perspectives on many new technologies and associated opportunities and potential risks.
The FDIC also participates on several working groups related to financial technology:
- The Basel Committee on Banking Supervision’s Task Force on Financial Technology, which focuses on the impact of financial technology on banks’ business models, risk management and implications for bank supervision;
- The Financial Stability Oversight Council (FSOC) Digital Assets Working Group, which is examining potential policy areas as they relate to digital assets and the application of distributed ledger technology; and
- An interagency FinTech discussion forum, which focuses on issues related to consumer compliance.
FinTech Legal Group
In 2018, the General Counsel announced a Legal Division initiative and formed a FinTech Legal Group comprised of attorneys from across the Division. The initiative will support the Legal Division and the FDIC, including its internal agency working groups with respect to emerging and novel legal issues arising from new digital and other forms of technology. In particular, the FinTech Legal Group considers developments that may transform the traditional banking business model, operations, systems, and vendor and consumer relationships; impact application of current laws and regulations; affect the risk profiles of FDIC-insured and FDIC-supervised institutions; and introduce new considerations in resolving failed institutions.