The Senate Banking Committee continued to examine Tuesday how to handle the regulation of fintech, as concerns persist about data aggregation and consumers’ privacy.
“I think it’s critical that the government move methodically on a regulatory approach to fintech so we encourage productive innovation but we don’t expose consumers to a lot of unnecessary risks,” Sen. Elizabeth Warren, D-Mass., said during the hearing entitled “Fintech: Examining Digitization, Data, and Technology.”
“As this marketplace rapidly develops, so must we constantly evaluate our regulatory and oversight framework, much of which was designed prior to the digital era,” added Sen. Mike Crapo, chairman of the of committee, during his opening remarks.
“To the extent that there are improvements that can be made to better foster and not stifle innovation, we should examine those.”
The hearing also focused on the Treasury Department’s release in early August of its fintech report. Warren stated her unease with the report.
“In almost every instance, [Treasury’s report] advocates for deregulation in an effort to stimulate the fintech industry,” Warren said. “I’m concerned about a lot of those recommendations. One set of recommendations is rolling back rules about how banks can share personal and financial information with third-party data aggregators.”
Crapo agreed that consumers must know “when their data is being collected and how it is being used.”
Many products and services in the fintech sector, Crapo said, “revolve around big data analytics, data aggregation and other technologies that make use of consumer data. Oftentimes these processes operate in the background, and are not always completely transparent to consumers.”
Warren queried Saule Omarova, professor of law at Cornell University, as to her concerns about banks’ ability to share personal and financial information with third-party data aggregators.
“My main concern is that the Treasury recommendation will open the floodgates for the banks … to open up this treasure trove of sensitive financial data on the customer that they have for much more uses by various types of companies,” Omarova responded.