Coordinated action is critical between federal regulators to continue moving the growing ecosystem for customer-directed transfers toward adoption of safer technologies and practices without undermining consumers’ § 1033 rights or frustrating the law’s potential benefits for competition and innovation.

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency released a guide for community banks on conducting diligence of financial technology companies. Drawing on existing guidance that articulates risk management expectations for third-party relationships, the guide highlights areas where required diligence processes can be adapted to reflect constraints related to doing business with early or expansion stage companies.

FinRegLab’s forthcoming research will help to inform the extent to which current laws and regulations are able to be satisfied in light of the emergence of more complex underwriting models, how well tools to develop and monitor those models perform in identifying effective ways to pursue greater inclusion and fairness, and considerations for policy and market developments that can support the safe, inclusive, and nondiscriminatory adoption of machine learning.

U.S. prudential regulators recognize the roles that both innovative technologies and data sources such as deposit account activity can play in providing responsible small- dollar loans to consumers and small businesses who do not meet supervised institutions’ traditional underwriting standards.

U.S. regulatory agencies recognize alternative data – and in particular cash flow data – can expand access to credit and produce benefits for consumers