The economy was one of the defining issues of the midterm elections, with inflation and the rising cost of living topping the list of concerns for American voters.
Now, a divided Washington faces the task of finding common ground to tackle these pocketbook challenges. Supporting an open and competitive economy should be a top priority, because a competitive marketplace means more choices and lower costs for consumers, businesses and the economy.
Technology-driven financial services (or fintech) are breaking down barriers to financial services.
But Washington can help unleash even more consumer benefits by modernizing its approach to financial policy and regulation. Taking an affirmative, risk-based approach to regulation will help unleash the competitive benefits of financial technologies for more Americans, from the young person using an alternative payments platform to purchase items interest-free to the local coffee shop owner reaching new customers online or the daughter managing her elder parent's finances through budgeting apps.
Other countries and regions are updating their regulatory frameworks to account for these developments, providing greater regulatory certainty to fintechs and increased consumer choice. Modernizing the U.S. financial regulatory framework to address fintech innovations will help ensure U.S. competitiveness from a global perspective. Pilots and sandboxes that carry the appropriate safe harbors could help facilitate policymakers' efforts to encourage and advance responsible innovation.
Innovations in artificial intelligence and machine learning are also bringing competition to financial services. The responsible use of AI/ML technologies helps lower costs, increase efficiency, expand fairness and enhance access to credit. But there is a need for clear guidelines to continue fostering the use of AI/ML, both for the companies using the technology and the regulators overseeing it.
Strengthening consumers' control of their financial data and affirming their right to choose their preferred financial services is critical to ongoing innovation and competition in the marketplace. The Consumer Financial Protection Bureau is leading efforts to establish consumers' data rights through Section 1033 rulemaking. Conversations are also ongoing on Capitol Hill and elsewhere about the future of alternative credit services like buy now/pay later and early wage access products, which help consumers take control of their finances.
Financial technology can mean the difference between being able to pay a bill on time and incurring an overdraft fee, or weathering a short-term financial shock and turning to a predatory lender. At a time when almost
Consumers are turning to fintech because they prefer speed, convenience and transparency. It's time for our financial policy to catch up and embrace these critical drivers of consumer-friendly services. Modernizing our approach to financial policies will be essential for America to remain competitive moving forward and can be an area of productive common ground for a new Washington.