Donald Trump’s presidential victory and Republicans’ gains in Congress will undoubtedly have implications for the financial technology industry. Forbes spoke with policy experts and executives to discuss four areas that could see big changes: banking regulation, the Consumer Financial Protection Bureau (CFPB), the partnerships fintechs have with banks to offer banking services and the CFPB’s new 1033 rule that governs consumers’ control over their banking data.
On the banking regulation front, “We can assume under Trump a typical pro-business, reduced regulatory burden,” says Michele Alt, a cofounder and partner at advisory firm Klaros and former lawyer at the Office of the Comptroller of the Currency. “I am also curious to see if Congress heeds recent calls for the creation of a payments charter for fintechs,” she adds. She’s referring to a bank charter that would give fintechs the payments-processing powers (but not the lending powers) they currently lack unless they partner with banks. She’ll also be watching whether the merger “shot clock” bill, which would set a time limit for how long regulators have to review bank mergers so they don’t drag out too long, will get more traction. The bill was proposed earlier this year by Kentucky Congressman Andy Barr.
Nearly everyone we spoke with said major changes will come to the CFPB, the federal agency created by the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act. The CFPB aims to “protect consumers from unfair, deceptive, or abusive practices and take action against companies that break the law.” Over the past four years, the agency has been more active than it was under President Trump’s first term, a dynamic that’s apparent in the number of public remarks the CFPB has made, the information requests it has sent to companies and the fines it has levied under Biden, says Katherine Flocken, a principal at Washington, D.C., regulatory advisory firm FS Vector. In 2023, the CFPB ordered $3.1 billion in fines and refunds for consumer relief, the largest sum it had ordered since 2015.
Now that Trump has won and Republicans have taken control of the Senate, the CFPB activity will likely slow, as it did under Kathy Kraniger, who led the agency during Trump’s first term. “[The CFPB] definitely will be less robust under a Republican administration and certainly with a Republican-controlled Congress,” Flocken says.
Jackie Reses, the cofounder and CEO of Lead Bank, a Kansas City bank that partners with fintechs to offer banking services, agrees there will be big changes to the CFPB given Trump’s election. She thinks some CFPB rules could potentially be rolled back, such as one the CFPB passed earlier this year that aims to reduce the late fees consumers pay for credit card payments from $32 to $8 on average.
Michele Alt is more skeptical that we’ll see big changes for the fintech industry under a Trump administration and Republican Congress. She points to four recent Supreme Court cases, including Loper Bright Enterprises v. Raimondo, that have reduced government agencies’ authority in interpreting ambiguous laws and redirected that duty to the courts. “The Supreme Court has effectively knee-capped the executive branch through these decisions by saying they all have to go through the judicial branch,” she says. In the coming years, she thinks the result could be a “regulatory chill” of weaker regulatory power and enforcement. She worries that all regulatory agencies consequently won’t be able to respond as quickly as they need to in times of financial crisis.
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Partnerships between fintechs and banks, where fintech startups often rely on traditional financial institutions to offer banking services like checking accounts and loans, have been under intense scrutiny over the past two years, with a growing number of regulatory enforcement actions in areas like anti-money laundering rules. With Trump’s win, FS Vector’s Flocken thinks the regulatory pressure will probably ease, though she adds a caveat. She says she’ll be watching to see if the Trump administration opens a certification process that allows fintechs to voluntarily comply with standards set by regulators.
The certification concept was introduced by former FDIC chair Jelena McWilliams while she served during Trump’s first term. It aimed to help fintech companies that wanted to partner with banks to improve their standing and familiarity among bank regulators. Such an initiative could also help financial institutions, especially smaller ones, that need to partner with fintechs to modernize and boost their business, Flocken says.
Reses doesn’t expect any major changes to bank-fintech partnerships under a Trump administration. “The FDIC has a bi-partisan board,” she says. She expects the FDIC’s proposed rule requiring fintechs and their bank partners to reconcile every customer’s account at the end of each day to move forward despite Trump’s win. The rule could prevent a disaster like the one that happened with Synapse, where thousands of consumers lost access to their funds. “I think it’s good policy,” Reses says.
Michele Alt thinks Republicans’ greater control over Congress and Trump’s victory could re-open the path for more fintechs to potentially obtain bank charters, a door that has been effectively closed under Biden. She also thinks that, in the wake of the recent Supreme Court decisions like Loper Bright that have weakened agencies’ authority, a well-resourced fintech that has been denied a bank charter could sue one of the agencies that handles charters. In that case, “The regulators wouldn’t have much to stand on to show [the court] they haven’t exceeded their authority,” she says.
In October, the CFPB released a final 1033 rule, which sets guidelines for consumers’ control over their banking data and how banks store, manage and make that data accessible. The topic has become an important battleground between big banks and fintechs like Plaid that connect consumers’ bank accounts to fintech apps. Flocken says some people have asked her if the rule will go away under Trump, but she doesn’t think so, since it’s a bipartisan regulation.
Alt points out that the CFPB’s final 1033 rule was challenged almost immediately after it was released when the Bank Policy Institute and Kentucky Bankers Association sued the CFPB, an event she thinks illustrates emboldened confidence among people and organizations that want to oppose regulatory agencies. She expects the 1033 rule “will be tied up in litigation for a long time,” but even if that’s the case, banks might comply with the substance of it due to its populist appeal and demands from their customers.
“The average person doesn’t really care about bank capital levels,” she says. “But if you ask, ‘Hey, do you think you should be able to transfer your accounts more easily? Do you think you should own your own data?’ One hundred percent of people are going to say yes.”
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