Imagine a world in which your phone can help you make financial decisions, from small things like choosing which loyalty programs give you the most bang for your buck, to big things like comparing mortgages. Or one in which an app can make the lag time between earning money and actually receiving the money you earned virtually disappear so you don’t end up visiting a predatory payday lender. Imagine a time when, as a small business owner, you can accept payments online from all over the world in minutes. Or when you can send money to relatives back home instantly and automatically.
Technology has always been an integral part of financial services – from ATMs to securities trading platforms. But increasingly, technology isn’t just changing the financial services industry, it’s changing the way consumers and business owners relate to their finances, and the way institutions function in our financial system.
Today at the White House, we convened stakeholders from across the financial technology (fintech) ecosystem, including traditional financial services institutions, fintech start-ups, investors, thought leaders, and policy makers, to discuss how fintech can help advance critical economic policy priorities. From consumers’ financial health to growing and managing small businesses; from cybersecurity to helping developing nations prosper; and from big data to blockchain – we spent the day identifying those areas where partnership across industries and between the public and private sectors can help advance our financial well-being and economic prosperity.
Here are a few highlights from today’s event.
FinTech and the Government’s Role in Fostering an Environment for Innovation
The afternoon began with Secretary of Commerce Penny Pritzker moderating a panel focused on what government can do to help ensure that innovators – whether from large institutions or start-ups – have the capacity, resources, and room to create products, services, and businesses that ultimately advance our nation’s economic competitiveness. Similar to the Secretary’s conversations during her recent Open for Innovation event in New York, today’s panel highlighted how financial firms and start-ups are partnering with one another to create and scale innovation, as well as the important role of government in ensuring that these partnerships can reach their full potential.
FinTech and SMEs
The Small Business Administration and Treasury Department continued the afternoon’s conversation with a discussion about the intersection of fintech and small and medium business enterprises (SMEs). Small business is a vital part of the American economy, responsible for creating nearly two-thirds of net new jobs in the U.S. each year and employing more than half of all Americans. Despite their importance, however, small businesses historically enjoy less access to capital and other resources that can help entrepreneurs manage operations and grow their businesses. Building on Treasury’s recent report on marketplace lending, the panel discussed how innovations in financial services can help entrepreneurs to benefit from marketplace lending, payments processing systems that assist with accounting and inventory management, or fraud protection and cybersecurity products that help protect the business and its customers.
Big Data and Civil Rights
Last month, the White House published a follow-up Big Data report on the intersection of big data and civil rights. As outlined in the report, financial data can help prevent fraud, assist consumers with managing their financial lives, and prompt access to credit for underserved populations. But these opportunities also come with risks for consumers, including risks to privacy and civil rights. During today’s Summit, Roy Austin, Deputy Assistant to the President for Urban Affairs, Justice, and Opportunity, spoke about the report’s recommendations and how fintech can use big data to advance both civil rights and opportunity.
FinTech and Financial Health
Jason Furman, Chair of the Council of Economic Advisors (CEA), moderated a panel on the intersection of fintech, financial inclusion, and financial health. This panel touched on the importance of access to basic financial services, and explored how new financial tools and services can help consumers make smart decisions about their finances, and ultimately improve their financial lives and overall well-being. As the number of financial products and services increase, and as our financial lives become more complicated, it’s imperative that consumers can find and use the tools they need to achieve their objectives. Whether you’re a recent graduate thinking about the best way to pay down your student debt while saving for the future, a young professional preparing to buy your first home, or a retiree wondering how to draw down the money you’ve worked hard to save, financial health is an issue that impacts all of us, regardless of demographics. You can learn more about this important topic in the issue brief CEA published today.
FinTech and Development
Finally, US Agency for International Development Administrator Gayle Smith capped off the day with a conversation about how fintech is becoming an increasingly potent enabler of development goals, in particular in countries overseas where innovations such as mobile phone-based payment systems are making vulnerable communities more resilient, allowing governments to operate more transparently, and underpinning new business models so that households living beyond the electricity grids in East Africa can access clean energy for the first time and Indian villages can develop sustainable water systems. To ensure these fintech innovations drive systemic improvements and support broad-based economic growth, the panel identified the need for the public and private sectors to align around a common vision and work together to lay the foundations for modern, inclusive economies.
These are just a few of the highlights from today’s discussion. We look forward to continuing our engagement with stakeholders about how best to harness fintech to improve financial well-being and promote economic prosperity.