On May 20, the House Financial Services Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence held a hearing titled “Partnering for Innovation: How Bank-Fintech Collaborations Enhance Financial Infrastructure.” Subcommittee Chairman Rep. Bryan Steil (R-WI) noted that bank-fintech partnerships “are a win-win,” combining the “technological expertise of software developers” with the consumer protections and compliance infrastructure of regulated banks. The hearing examined how these partnerships operate in practice, evaluated consumer and market benefits as well as associated risks and compliance responsibilities, and explored the regulatory and supervisory landscape and potential policy approaches to promote innovation and consumer protection.

The subcommittee examined H.R. 6552, the “Bank-Fintech Partnership Enhancement Act,” introduced by Rep. Andy Barr (R-KY), which would require the Fed, the OCC, and the FDIC to study the impact of bank-fintech partnerships on competition, innovation, consumer protection, and the availability of financial products and services, and would further require the NCUA to carry out a similar study for credit unions. Members discussed examiner expertise gaps identified in a 2023 GAO report, the need for regulatory clarity and standardization of exam procedures across prudential regulators, and uncertainty created by a recent 10th Circuit decision (covered by this Orrick Insight here) narrowing the scope of state bank rate preemption. As previously covered by InfoBytes, the litigation remains ongoing, with the 10th Circuit in April granting a petition for rehearing en banc in the case.