Open Dialogue with Chairman McWilliams

Open Dialogue with Chairman McWilliams


– Okay.
So, I’ve already mentioned that Chairman McWilliams
has placed a strong emphasis on supporting
financial innovation here at the FDIC since
arriving. But another one of
her initiatives has been transparency, and promoting trust
through transparency by traveling
and listening to stakeholders around the country. And for this lunch session
we’re sort of marrying the two. She’s agreed to come back
and spend half an hour with us discussing questions that you all
provided to us in advance. We received
many great questions reflecting
a diverse set of issues, so she’s going to address
sort of, the five themes that come through
most frequently. Before I bring her to the
stage, I recalled
one housekeeping item. I received
several emails from people wanting access to the papers that the economists
have presented today. Our plan is to post those
on our website after the conference. So we will do that and we will
also send you an email when they are ready. So that will be
made available. Okay, now without further delay
please join me in welcoming Chairman McWilliams. [applause] – So this is what happens
when all of the good speakers get to speak before lunch
and after lunch, and you’re stuck with
the Chairman at lunch. So we have collected… we had
basically asked the staff, I said, you know what, we always
tell others what to do, and, you know, we always
go through the formal public and notice
comment process and request for
information to get– to solicit feedback
from people about how we should be
looking at things, and I said, this conference
is our opportunity to actually solicit questions
from the audience and see if we can provide some
answers, or at least engage. So we have collected
the questions that have come to us
before the conference. We grouped them in five
categories, and I’m supposed to do
the David Letterman: five, four, three, two!
[laughter] And then we decided, you know,
that’s too cool for a regulatory agency. So we’re going to go
the old-fashioned way. So I have the cards here
with the questions, and if we have enough time
at the end, we’ll take questions live
from the audience as well. And, so, one of the
questions we got– and this is where
I go number one– Okay, number one! The rise–
oh, it’s on that screen. The rise of FinTechs. How has the rise of FinTech
affected competition for financial services
and among banks? I’ll give you an example:
When I took this job, I said, you know what, I really should get the
community banking experience. So I drove about an hour
out from D.C.– I’m not going to tell you
in which direction– there are two directions
from D.C., two different states, and I drove to a community bank,
and I went in, and I said, I would like to open up
a checking account. And they greeted me,
they were very nice, they asked who do I work for,
and I said, FDIC, and they said,
are you in compliance? And I said, maybe. [laughter] And they said,
what do you do for the FDIC? And I said,
I’m an attorney. So what does that mean? I said, well,
I look at regulations. Hmmm, okay. And then they gave me
my checking account card, and they said, your debit card
will be mailed to you. And then they took
a piece of paper. They typed it up
and laminated the card and gave me the card. And I remember looking– last time I looked at
a laminated card, it was a Blockbuster card. [laughter] And so I thought as
I was driving back for an hour– and took about an hour
and 20 minutes on the way back to D.C. As I was driving back
I was thinking, how do community banks compete
with FinTechs and technology, and the development
of technology, and the investment in technology
they need to compete? And the FDIC did
a community banking study and survey, back in 2012, and there were
some updates in 2015, about the economies of scale and how it’s very difficult
for community banks to compete, especially when it comes to
the investment in technology and keeping up with
the regulatory landscape. So the main component
of the competition that we’re seeing between
FinTechs and banks and then among FinTechs,
banks, and non-banks, is consumer experience, right. We have come to the point
where people are very, very, very much
so not patient, right. You apply for something
and you expect it to appear. And I remember I was filing
my taxes and, you know, you have to input a code in order for you to be able to
file electronically, and they send you the code, and literally in the span of–
I think it was a nanosecond, I was like, where is my code? And of course it came
and it was all of 20 seconds. But the truth of the matter is that we have become
very impatient. We want delivery now,
and FinTechs are able to provide more agility than
traditional banks because they’re able to work
through their algorithms and technological innovations
and look at ways and proceed much
more quickly than banks. So the question for us is,
how can we encourage banks and create a regulatory
environment where they can
compete with that? And one of the focuses
that we have at the FDIC, and I’ll talk
a little bit later about the FDIC Office
of Innovation– is exactly that–
how can we enable FinTechs to be good partners to banks? How can we enable competition
within banks in this consumer space
to encourage more innovation? And how can we
on the regulatory side look at our regulatory
framework, and not look at
the past century, but look at the century ahead,
and think about, are we putting regulatory
obstacles to the ability of banks
to innovate and develop in this space? So in general, we are in favor
of FinTech partnerships, and there are just questions
on how best to do it. And we’re also in favor of
developing technology and being entrepreneurial
on the bank side, inside the bank,
and the question is again, how do we enable banks
to paint this space wisely? There’s also an issue
of reducing compliance burden on some of these community banks
in particular, so that they’re able to compete,
and technology has– I call it the great equalizer– it has an ability to actually
help community banks compete more effectively
in a space, where without technology, and new developments
in technology, they would be
complete outliers. But also we need to focus
on how to reduce risk that comes up with
all of this in our system, and that would be,
I would say, that’s the third prong
of our approach. How can we do all of this
while making sure that the system
is safe and sound, and that we’re not
increasing risk to financial stability? All right, so number two. It worked,
with a nanosecond delay. How have requests
from FinTechs changed the FDIC’s approach
to new charters? They have not. Next question. [laughter] No, I’m joking. We have a statutory…
this was a trick question, and I think some of you
were very tricky. This is basically a question,
are we looking at the ILC applications
in any different way (Industrial Loan Corporation)? So let me just translate
the question for you. The truth of the matter is that we have statutory
requirements we have to meet and then we have–and they’re
good old statutory requirements, whether you are a bank
applying for deposit insurance, or if you’re an ILC applying
for deposit insurance– and as we look at
those statutory requirements and our regulatory
requirements, we have to focus on safety
and soundness of the institution for which we’re
looking to approve the deposit insurance
application. And there are two things
that we have to focus in– specifically that basically, for the purposes
of the FinTechs, put a lot of question marks, and one of them
is capital adequacy. We have a regulatory requirement
that at the end year three, you’re supposed to
have 8% capital at your entity. And for FinTechs, 8% capital, some of them have translated
to mean equity, and capital does not–if I had
a hashtag to show you this, capital doesn’t–
hashtag–no, nothing. Okay. Never mind.
[laughter] Capital doesn’t equal equity, and working through
the capital adequacy issues for FinTechs has been
rather interesting and cumbersome in some cases. And the second component
we have is profitability. And I spent enough
time in Silicon Valley as a young lawyer
in the early 2000s, that I know that I met
a lot of millionaires on paper, MOPS, and they couldn’t even
buy a car. So the issue is, how profitable
are these companies, and can they show profitability
that would give us peace of mind as they’re
applying for ILC charter, and getting deposit insurance, that we’re not introducing
risk to the system. We have attempted to be
more transparent about how we do applications for the nouveau insurance
at the FDIC, and we’re posting more data through our Trust Through
Transparency initiative on our website. And we’re also looking at ways
how can we improve our process where it’s more consultative. We have started the preliminary
filing process at the FDIC, where we’re entertaining
a lot of questions from FinTechs and the nouveau banks, on how…how the application
should be structured, and how it looks,
and what it should look like to become
substantially complete. So we’re trying to make
some progress in this area, but the truth of the matter is
that capital adequacy and profitability
are requirements we need to be very focused on, and we’ll proceed
with the ILC applications as they come in. We have a statutory
mandate to do so, but they have to satisfy
the requirements we have on both the statutory
and regulatory side. All right. Number three. There we go. How can the FDIC help enable
FinTech partnerships with banks? We can’t. Next. No, I’m kidding.
We can, actually. The issue is,
what do FinTech partnerships provide for banks?
And in a lot of cases, they provide the ability of
banks to be agile, to be able to access markets
and customers that they may otherwise not be
able to access on their own. They provide the ability
for banks to be more efficient in how they both
reach consumers and how they offer products
and services. So the idea here at the FDIC, and I’ll talk about
the FDIC Tech Lab in a second, the idea here is
really for us to focus on, what can we do to
encourage these partnerships in a responsible manner? And people talk about
sandboxes, people talk
about pilot programs, partnerships, etcetera. The idea for us
is to enable the culture, both within the FDIC
and outside, of working with
different FinTechs and different banks on, how can we structure
a regulatory framework where innovation is encouraged, whether or not it happens
inside of the banks or outside in partnership
with the FinTechs. And that’s something
we’re focused on. We’re also working with
our partner agencies to harmonize
our regulatory framework so that we are all looking at
innovation and the ability of banks
to innovate, and FinTechs to partner up
with banks in a similar fashion, even if Joseph Otting
will not admit that I’m a better regulator. [laughter] We’re also looking at
third-party risk management, and this is a huge area
of concern as banks are looking to
partner up with FinTechs. And the question
I often get is that, your third-party risk management
guidance basically says that they have to know
my third party’s third party and their third party. And the truth of the matter is
that there are several ways to introduce risk
into a bank and into the financial system. And the question is,
how far do we need to go, to how deep do we need to go, to be able to assess
really what the risk is to a financial entity
and then the broader system. And so this is where
the FinTech issue becomes all the more volatile for the purposes
of our analyses. Do these FinTechs have
the compliance regimes in place that give us
a sense of security that once they partner up
with a bank we will know how they are
managing their cyber, their PII issues– personal identifiable
information– just general safety
and soundness risks. And this is where
I think a lot of FinTechs are still struggling
in the space. Because they are not
directly regulated by us, but by virtual or third-party
risk management, they basically feel they are indirectly
regulated by us; and what I found
to be very helpful as I talk to banks
and FinTechs, is that, a lot of banks are actually
very encouraging of FinTechs, allowing them to look into
their compliance system, so that the bank can vouch for
what the FinTech is doing. And I was in California
a couple weeks ago talking to FinTechs
exactly about this, how do you partner up
with banks and are we in your way? And if we are in your way,
how are we in your way; and does it make sense
to be in your way? And are we regulating banks
vis-a-vis FinTechs appropriately. And one of the things that– scenarios that was
laid out for me is that– we want to comply–
this is the FinTechs– and want to be able to
partner up with as many banks as possible. But understand
that banks are asking us to send their compliance staff and look into
our compliances systems, and have access to our data. And then as we look in, to us, it looks like
a takeover, in a way. And so, finding that balance where the banks are
encouraging FinTechs to have the structure in place, where we the regulator
will look at the bank and the third party and say,
okay, everything is good, check the box, and yet not providing
instability in the system by feeling that the FinTech is
being taken over by banks’ compliance staff,
or its data or trade secrets or business models
are being exposed, is something that
we are actually struggling to find the right balance–
balance for. Next question, number four, is: How will the availability of
data change banking? And so I joke at the FDIC
that data is the new capital, but every time I say that joke, my capital markets team
looks at me, and I think they’re trying
to figure out what Basel III risk weighting
they should assign to this new form of capital. That is a joke. But that phrase, I feel it
captures the importance of data, and data,
truly is the new currency. If you have data,
if you have access to data, you can change the world. And that’s something that’s
not lost on the FDIC, right? We get into the issues
of open banking. I get asked quite often
about open banking in the UK, and whether or not that’s
the right approach here in the United States. I believe some of that would
require legislative changes, and I wouldn’t say
that I’m inept in saying what those are, but I certainly shouldn’t
wade in those territories. From a regulatory perspective
though, we need to take a look and see
how is this data being shared, what are the consumer
privacy concerns, and what are the competitive
and anti-competitive landscapes that we are encountering
as we look at who owns data, how should the data be served, and who should it be available
and under what circumstances. And if you really
think about it, if you made all of the data
available to everyone, you would have a tremendous
amount of competition, which would drive the cost down and produce probably more
efficiencies in the system; but you would increase risk of
cybersecurity incidents and privacy theft. And so the question
for the regulators is, you want to encourage
innovation, you want to encourage
competition, entrepreneurship, a good thing. But how do you balance
all of that with basic safety and soundness, and risks to
the financial stability and consumer protection,
laws and regulations, that we have on the books? And that’s something
that we’ll be exploring at the FDIC
in the months to come. So I think there’s a subset
of this question, which was also focused
on…what is the FDIC– how much data
does the FDIC have? We have more data than
would fit this building, and one of the purposes behind our Trust Through
Transparency initiative– and I’m hoping that you all
crash the website today. My IT people are probably
saying, please don’t. Go in to our Trust Through
Transparency website to see all the types of data
we have put out, and we’re constantly updating
and offering more for folks to take a look at,
and it’s a part of our both Transparency
and Accountability initiative at the FDIC. We have a lot of data
and we use them for supervision. We use them for
our consumer research. We use them for
general research. We have tons of
failed bank data which we’re looking to
make accessible to researchers in the coming months. And really, whatever data
we can make available to the public at the FDIC,
we would like to make efforts to make it publicly available
as much as we’re allowed to under the privacy laws
and the confidential supervisory information
concerns we have. But the truth of the matter is that if we make this data
available from the FDIC side, that perhaps, the researchers
and folks in this room and outside, are going to be
able to take a look at how the agency
is doing things and utilize that data
to help us be better. And I’m hoping
that the private companies will realize there’s benefit
in making more data publicly available than not. So we’re hoping to
lead by example as much as we can at the FDIC. And number five,
why is the FDIC the best regulatory agency
in town? [laughter] Never mind. What role will
the FDIC Tech Lab have? So hopefully,
when you went to our website to register for the conference,
you got some snippet, someplace on the website
about this lab we’re trying to create. And let me
just be very frank, most of the agencies
are creating some form of a lab, some form of this tech corner,
lab, sandbox; call it what you want. And the easiest thing for us
would have been just to say, hey, we have a lab,
let’s call it whatever we are
going to call it, put a person on top of it
and we’re good to go. And that’s not what we’re
trying to do at the FDIC. What we’re trying to do
is basically create a disruptor in the regulatory role,
and as you can imagine, regulators are by nature
very, very, very risk averse. And so being able to
step out on the limb and say, the world is changing
and our regulatory framework was founded and established
pretty much in the last century. There were some tweaks
done in this century, but we’re talking
about the FDIC, an 85-year-old agency,
and most of our rules and regulations
were put in place pre-2000. There were some tweaks
post-2000; there was Dodd-Frank
that brought us new regulations and new powers, but truly as we look at
the world of banking, as we look at capital
liquidity, as we look at safety
and soundness, and in some cases,
even consumer protection issues, we’re looking very much so
to the past. And so for the FDIC,
the question is, as I mentioned
earlier today, it’s going to be almost
impossible for us to be leading and on the cutting edge
of technology by virtue of us
being who we are, a federal regulatory agency. But we do have an opportunity
to take a look at the regulatory landscape
and say, are we enabling innovation, and are we enabling
the 21st century banking, or are we holding it back? Are we holding everything back
in the last century? And so the lab, the purpose
for the lab is really, to…both
inward and outward engage, and think through
technological issues and how can we encourage
innovation, both in the way the FDIC
looks at and supervises banks, and also at
how can we enable banks to partner up with FinTechs? How can we enable banks to
actually innovate on their own, and create agility
and the ability in the system, in their systems,
to meet consumer demands, be on the cutting edge of
financial services, and be able to offer products
and services that both FinTechs and non-banks
are now able to offer with greater speed
and efficiency? And the idea behind the lab
is also partly… attributed to my concern that we have created our
regulatory framework, especially since
the financial crisis, where every bank is very
concerned about doing anything. No matter how large you are
or how small you are, you are very concerned
about being an outlier, being out there,
being the unicorn. And that has resulted
in a lot of the banking activity being basically shifted
to non-banks. And if you take a look
in the mortgage servicing, mortgage origination arena, 10-12 years ago,
among the top 10 of servicers and originators in the country, we had banks
among the top six or seven. And now,
it’s the exact opposite. And I’m not making
a value judgment whether or not that’s
good or bad, but I am making a judgment
that we have minimized, or reduced I would say,
the risk in the banks, but we have not necessarily
reduced that risk in the financial sectors. So the more we are able to
get a grasp of what’s happening
outside of the banks, it’ll give us a better sense
of how the system is working and where we need to focus, and as Secretary of the Treasury
this morning mentioned, we know what
the old crisis looked like, and I can’t help but pitch
the FDIC’s publications on crisis and response. It’s a phenomenal book,
and maybe we have– can we provide some to
the audience? Do we have any? Well, anyhow, on demand
we can provide you book. It’s glossy and it’s good
and it just dawned on me, we should have been like– if we were a business we would
be like having big billboards with this book out there. So it’s about how the FDIC
looked at the last crisis and responded to it,
and as we look at all of that, we need to focus on
not the last crisis, but what could be
the crisis ahead, and we can’t do that
if we’re looking back and treating
our regulatory framework as a framework
from 10 years ago, looking at the same
idiosyncrasies that caused
the financial crisis. We need to focus on those. We need to be cognizant of
the safety and soundness issues and consumer protection,
but we need to be forging ahead and thinking straight
through the issues that are coming up in
both banks, non-banks, FinTechs, and seeing what is the role
of the FDIC and the other
regulatory agencies. And what can we do now
to make sure that we can answer those
questions in 5, 10, 15 years. Luckily for me,
my term ends in 2023. All right. With that I think we have
come to the bottom of the five questions,
top 5 questions, and I would just like to open
it to the audience. As I know from this morning–
where’s Aaron? You can’t ask
any more questions. Your 12 seconds
have been revoked. – Thank you.
Chairman McWilliams, well, congratulations
on this conference and on your endorsement
of FinTech. Here is my question:
Obviously FinTech and technology is a very logical,
analytical approach to data. Is the FDIC also open to
the other side of the spectrum which shows that
under certain circumstances, banking customers actually
make banking decisions that are not
necessarily analytical? They are more intuitive, and as we saw in the area
of behavioral economics, those decisions
are often the wrong decisions. The question is,
considering FinTech, would the FDIC also be willing
to look at studies in behavioral economics
that shows irrational decision making
by banking customers? – So if I didn’t know
any better– – Thank you.
– Thank you. If I didn’t know any better,
I would say are you Dan Ariely, who wrote
Predictably Irrational
? We’re looking at all of that. We have extensive
consumer research, and we know that consumer
decisions are driven from a number of different
perspectives. Sometimes it’s the need,
sometimes it’s the perception, and then there are
many other reasons. But we need to be, as
an agency, open to considering
different ways of how consumers are
approaching these products, and how they’re going to
look at what the banks and the FinTechs
and the non-banks are going to offer to them. And then, also we need to get
a little bit of a sense of– even more so than we do now– as to when they make
those decisions, even if they’re not
perfectly rational decisions, how does their decision making
affect the ability of the companies
to offer products and think through kind of
a greater systemic risk type of issues. You don’t want everybody going to choose
a consumer product just because it, you know,
has the lowest rate, or it makes the most sense
at that time, if the product is really risky. So we’re focusing on
all of that, and speaking of data
and all of that, we have a solid research
department at the FDIC. I have to praise our folks because they constantly look
at the studies and look for papers
to publish on similar issues. We are a deposit
insurance agency. Having said that,
we focus quite a bit in the consumer research space. – Thank you.
I’m the other Dan. I’m the Dan who wrote the study
on money anxiety, not on the irrational
decisions. – Well, there you go.
– [laughter] – Thank you, Chairman. Josh Silver, National Community
Reinvestment Coalition. You were talking about the FDIC
application process and particularly for FinTechs,
and I want to ask a question. There’s been a few
applications from FinTechs to become full-fledged banks,
both through the FDIC and the OCC. And NCRC,
we’re an organization of 600 community organizations
around the country. We care deeply about
the Community Reinvestment Act and obligations to serve
all communities, and financial inclusion,
which you share as well. And when you open up
an application for a FinTech, it says, invariably, our assessment area
is our headquarters city, that’s where we’re going
to have our CRA responsibility. And FinTechs are
nationwide lenders, or nationwide service
providers, and you cannot appreciate
how frustrating that is for CRA advocates, that my responsibility
is only going to be in my headquarters city. You’re undergoing
a CRA reform process with your fellow regulators, and assessment areas is one
of the items on the table for discussion and for reform. Do you have any thoughts
for us today about how we can choose states
and metro areas and rural areas that
the FinTechs should indicate a responsibility for
in their application? – It’s a great question,
and as you mentioned, the CRA is going through that
rule-making process right now, so we have been careful
not to comment on the specifics until
the three regulatory agencies actually have
something on paper that reflects a proposal. But I can talk generally
about how we’re looking at… frankly,
digital banking channels, and now you have banks that are
very much so just digital, or you have banks
that have more digital presence than on-the-ground presence
in terms of their branches; and the question becomes
what is their footprint, right, and who are their communities? And it’s something that,
you know, I spoke about the importance of
branches in the past. Branches still serve a purpose. The question is, you know,
what purpose, and how can that be allocated
appropriately for the purposes of the CRA
as we move forward through modernization? With respect to the FinTechs, I don’t know that we have
approved applications necessarily thus far, where those concerns
have not been addressed, and we certainly work with
the FinTechs on– as they approach us about,
hey, we are thinking about the nouveau bank,
or acquiring a bank, or a national charter,
or an ILC charter. We certainly tell them
to focus on exactly how are you going to
meet community needs. And I can tell you,
that I personally have had discussions with
different people coming through my office about,
hey, we are thinking about all of these different charters
and options for, you know, our entity. And I said hey, whichever one
you pick, just remember this– you will have to figure out
how to serve your communities and you have to be able to
satisfy that requirement on your application
to get approved to the extent that you come for
deposit insurance at the FDIC. – Thank you.
– Thank you. – Good afternoon. I have a question. I’m Heather Eastep with
Hunton, Andrews, Kurth, and I want to revisit point 3,
enabling FinTech partnerships and referencing
the regulatory framework where innovation is encouraged. What can community banks
expect on exam, and how are exam staff
being trained on innovation? – So we have a lot of boots
on the ground. So the FDIC has
89 field offices. Most of our workforce at
the FDIC– we have 6,000 employees–
is the examination workforce. We take about four years
to train examiners. And focusing on innovation is
not necessarily new at the FDIC, because banks
have been innovating and doing
innovative stuff for ages, but focusing on
innovation in a way that our regulatory framework
supports innovation, and doesn’t penalize banks
for innovation, is somewhat of a new angle
at the FDIC, right, because you want to
encourage banks to think outside of the box. And you want to encourage
them to basically think about how can they get more
consumers? We like consumers in banking. We prefer to have bank consumers
versus unbanked and underbanked consumers, because we believe it’s
a path to wealth-building. We believe it’s a path
to prosperity. And so long as banks
are treating consumers well, it’s a better place for them
to get their financial products. And so, from our perspective
the question is, how can we get to
our 4,000-plus examiners with exactly that message,
that– think about the bank
that’s innovating, innovating with due deference to the business decision making,
you know. We need to focus on
consumer protection. Is what the bank is offering
going to harm consumers? Does the bank know
what they are doing? And what we found out is
that a lot of times, banks are struggling to attract
new customers and bring them into the fold, and there are
two basic ways to do so. One is to acquire
another entity, another bank or a portfolio,
or set of assets, and try to bring
those consumers over and expand banking
relationships to those, which is very, very costly. You can also try on that side to lure consumers
from other banks by offering
several hundred dollars for opening a checking account
or a water bottle. I don’t know
what’s the latest. Or you can basically try to
reach the unbanked, underbanked, folks who have fallen
out of the banking fold and try to bring them back in with innovative products
and services. And so I think on both sides
we need to focus on what is the role
of a regulatory agency, right? And on the side
where you’re trying to bring new customers
into the fold, banks will have to offer them
some types of products that are different
than the products those customers are currently
getting from non-banks, right. And the question for
our examination force is, how exactly to look at that and preserve consumer protection
and safety and soundness. And so we have done extensive
training with our examiners, both of my heads of supervision
on the consumer side and the risk management
prudential side are sitting at a table and they talk to the examiners
all the time. We had about 550 examiners here
in this auditorium last week in two different sessions, where we talked about
a number of things and I came to address
both crowds. I am doing a nationwide
listening tour and meeting
with my examination staff in a lot of the states
and different offices throughout the country. And the truth of
the matter is, you know, you have to reach
all the people and they’re all individuals. But we do have
rigorous protocols in place. We put them through testing. We bring them here for training
at least once a year on different topics. We have internal webinars
and compliance manuals that they have to go through to learn how to exactly
think through these issues and then if there is a question
that cannot be solved at a regional level, that question usually
comes up to Washington and our heads
of supervision here, and they will bring it to
my attention and say, hey, this is kind of
what the bank is thinking and we’re not sure
about this product. And we’ll try to
do a little bit more of a deeper dive
at the D.C. level. – Okay. Thank you. – Thank you. I think we may be out of time. Unless we have
one more question. Aaron, do you have a question? [chuckles] All right. I’m not begging
for a question. I’m just saying if you want it,
you can have it. [indistinct] I’d be interested in
regular FDIC reports, OCC reports, semi-annual
risk perspectives– I forget exactly what the
titles are– but you mentioned
a lot of the concerns among the consolidation
[indistinct] space to [indistinct] banks, and what we’ve been hearing,
at least from other banks that we’ve spoken to, is
that this consolidation is actually hurting banks’
ability to innovate. So I’d be interested
in learning if you’ve heard those reactions
from some of your FDIC members, and if you guys are thinking about doing
anything in that space. – And did you say consolidation
among banks, or what kind of consolidation
are you talking about? – [indistinct] – Yeah, yeah, yeah. No, it’s true, and here’s… consolidation in general
is happening. So people ask me all the time, you know,
we’re losing small banks. You know,
if you take a look at the chart how many we had, and we’re down now to
about 5,400 and change, consolidation is happening
both at the banks and the core processors, and I think that this is where
you have some of the FinTechs stepping in and taking advantage
of that consolidation. And for us,
from the regulatory side, you know, we know
the core processors, the main core processors,
rather well. We examine them in some form,
and now we need to be open to actually allowing new
entrants into the marketplace and just adjusting
our regulatory framework to better be able to
understand the new entrants and encourage innovation
and competition in that space, because I think in the end, small banks can benefit
from more competition in that space as well. Thank you. All right. Well, with that
I will let you go to the better part
of the conference than my presentation here
today. And thank you, truly
thank you all for being here. This has been a phenomenal
feedback from the public and both on the regulatory side
and outside here, and it’s a pleasure
to have you here, and thank you for coming
very much. Thank you.
– [applause] – Okay. We’re going to take
just a brief break, about 10 minutes or so, and let the next panel set up, but we’ll start at 1:45,
which is on time. So just stretch your legs
and come back soon.

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