Pub. 1 2021 Issue 3

June 2021 | 17 financial data and whether and how the data are to be shared with other entities. The CFPB is in the process of writing new rules about consumers’ rights to access their own financial data and the ability to share that information with third parties, including data aggregators. Data aggregators act as intermediaries, collecting data from consumer bank accounts and transmitting it to fintech firms. The agency was given responsibility for writing those rules as part of the Dodd-Frank Act of 2010, and it is striving to balance the rights of consumers against potential harm to financial institutions regarding legitimate competitive concerns. Protection in the Digital Age Although the benefits of many of these new options — such as convenience, lower prices and personalization —may be readily apparent to consumers, some of the drawbacks may not be. Because fintech firms communicate with customers electronically via mobile device or the internet, accessing customer service when there’s a problemmay be difficult. Costs, data sharing and contract terms such as forced arbitration may be “hidden in the small print,” in the same way they are for older products and services. And regulations that apply in some aspects of fintech transactions may not apply to all of them. For example, a payment made on a person-to-person platform like Venmo or PayPal would not be covered by the Electronic Funds Transfer Act if the funds come from the app’s account balance rather than as a direct payment from the consumer’s bank account through the app. Buyer — and Seller — Beware Most of the consumer protection issues that arise in digital banking vary little from their less technologically oriented counterparts and for the most part, the same consumer protection laws and regulations apply. Fintech firms that obtain bank charters and offer deposits insured by the Federal Deposit Insurance Corp. take on the added responsibility of complying with the Community Reinvestment Act (CRA), a 1977 law that requires banks to invest in the communities in which they collect deposits. The regulations implementing CRA are undergoing their first significant overhaul in several decades, and how to handle the digital transformation in banking is one of the more challenging issues confronting the federal banking regulators. Regardless of structure or charter, however, fintech firms that offer banking services to consumers face a myriad of new regulations and a learning curve. As these firms adjust to this new regulatory regime, it will be increasingly important to ensure that consumers are aware of the differences in protections in place based on a firm’s structure so they can make financial decisions that best meet their needs. ■ Notes and References 1 The term neobank typically refers to companies that use applications — desktop or mobile — to offer financial services to customers. Carl White Senior Vice President Carl White has 32 years of experience in the Supervision Division of the Federal Reserve Bank of St. Louis. He is currently senior vice president of the Supervision, Credit, Community Development and Learning Innovation Division. He has served in various other roles within Safety and Soundness, beginning his career as an examiner. Mr. White has served as lead instructor and course developer on numerous Fed System training courses, including an international assignment in Brazil. In addition, he served as the central point of contact for the District’s largest state member bank before and during the financial crisis. He and his teamwere nominated for the District’s President’s Award for Innovation as a result of efforts to implement and enhance off-site loan review and examination processes. Mr. White holds a bachelor’s degree with a major in finance from St. Louis University.