Fintech Could Cause Next Financial Crisis

As a House Financial Services sub-committee readies for today’s hearing to examine opportunities in the financial space for fintech, new research suggests that unregulated fintech companies could set the stage for another financial crisis.

An Inside Sources article posted Monday, draws from a research paper by Federal Financial Analytics Inc., which finds that "as finance moves outside banks and the infrastructure heads into the cloud, risk is quickly circumventing banking and threatening critical infrastructure, the ability of central banks to stabilize markets, and even the economic equality on which financial security depends."

CUNA and the state leagues maintain that while fintechs can produce real benefits to consumers, regulatory flexibility must be balanced with the need for overall financial services sector stability and competitive equality. Fintech companies should be subject to equivalent safety and soundness regimes as regulated financial institutions. 

CUNA will monitor today’s hearing which is slated to begin at 9 a.m.