FinTech Companies Could Soon Be Competing With Investment Banks

Hi everybody, I stumbled upon an article, which states that the government is working on legislation to allow "online lenders and payment companies" to expand and provide banking services. The article mentions the rapidly expanding companies Square and Coinbase are pushing for this legislation, although the majority seems to be opposing it, as this topic has been discussed for the past several years.

The new charter is available only to companies that do not take and hold deposits, and it comes with a thick set of rules. Applicants will be required to prove that they have the capital and liquidity needed to carry out their plans and adequate security technology and internal controls to protect their customers and comply with financial laws.

“Companies that provide banking services in innovative ways deserve the opportunity to pursue that business on a national scale,” Mr. Otting said.

John W. Ryan, the president of the conference, called the charter “a regulatory train wreck in the making.”

I think this is a great advancement that would allow greater competition and promote innovation. As an investment banker, it doesn't seem very good as greater competition could lower fees, but from a macroeconomic perspective, I think this is a good move as long as it is approached cautiously. There definitely could be many risks with allowing FinTech companies to pass certain legislation or drawbacks if a FinTech company fails.

Are you guys at all concerned with this legislation? Do you think it will have any major impacts on the industry? For aspiring bankers, does this legislation incentivize you to consider a career in FinTech if you could provide some of the similar services but join an innovative and rapidly growing tech company?

https://www.nytimes. com/2018/07/31/business/dealbook/fintech-bank-charter.html?rref=collection%2Ftimestopic%2FBanking%20Industry&action=click&contentCollection=timestopics&region=stream&module=stream_unit&version=latest&contentPlacement=2&pgtype=collection