CFPB Says Innovation Can Improve Lives: Money 20/20
The CFPB released a report highlighting developments including new products, services, and trends from financial technology startups and traditional financial institutions with the potential to produce consumer benefits.
“Innovation has enormous potential to improve the financial lives of consumers,” CFPB Director Richard Cordray said at Money 20/20 in Las Vegas. “At the same time, market developments cannot skirt the need for strong consumer protection. Through Project Catalyst and other Bureau activities, we are working to expand our own knowledge and to foster a consumer financial marketplace where emerging products can be developed that are safe and beneficial for consumers.”
Project Catalyst revealed a range of innovative marketplace developments. Highlights include:
- Expanding access to credit: The CFPB estimates that roughly 45 million Americans have either no credit history, or credit history that is too scarce or too stale to generate a credit score. A number of innovators are seeking to expand responsible access to credit.
- Supporting safe consumer financial records access: Innovative tools for personal financial management can help families better manage their finances and weather financial shocks.
- Better cash-flow management: Some fintech companies are developing tools to help address challenges posed by a time lag in cash flow for expenses and income.
- Increasing options for student loan refinancing: In 2013, the bureau highlighted concerns around the lack of student loan refinancing options. Project Catalyst learned of fintech companies offering borrowers with high-rate student loan debt an opportunity to refinance.
- Modernizing mortgage servicing platforms: Companies are looking to adopt or build technology platforms to improve loan servicing and provide more flexibility and scalability as compared with legacy platforms.
- Improving credit reporting engagement: Fintech firms are developing tools to improve consumer engagement around credit reporting and address issues around accuracy and understanding.
- Improving peer-to-peer money transfers: Project Catalyst learned of a number of fintech firms working to make money transfers more consumer friendly. For example, some companies want to provide real-time price comparison services, so people sending money overseas can easily find the cheapest and most convenient ways to do so.
- Supporting consumer savings: Companies offering services designed to help build emergency savings can help consumers determine how much they can afford to save based on their income and expenses, and automate their choice to save money.
Cordray acknowledged an affinity for those seeking to harness new technologies to better serve customers since the CFPB is also a new agency. “We are committed to being data-driven, and we have adopted innovative approaches to fulfill our mission.”
Corday described how the CFPB handled over one million consumer complaints to date, made publicly available and accessible through an API. Users have the ability to search, sort, and filter data based on specific criteria or tags, and can download data in their desired formats. “We analyze this data ourselves using natural language processing and other methods. Our new eRegulations tool eases access to the vast body of federal consumer finance regulations and renders them searchable by consumers and industry alike. We are building web-based tools to help people make financial decisions. We have also issued a set of influential principles that reflects our vision for protecting and supporting consumers in the push for faster payment systems.”