As Prepared for Delivery on May 12, 2021
Good morning! It’s a pleasure to be here – and I mean that literally, as it’s the first chance we’ve had to gather together in person in well over a year. Please be patient with me today, because I’ve spent so much time video-conferencing this last year, I fear my public speaking skills have atrophied.
But the fact that we can be here together, in a shared physical space, is tremendously reassuring — because it’s proof-positive that things are getting better. Obviously, we’re still not out of the woods. But I think we’re finding, as vaccination numbers go up and COVID-19 case numbers go down, that we’re on the right track.
Of course, once the pandemic subsides, we’ll still have a lot of work to do to rebuild – and near the top of the list will be addressing the economic impacts of this last year. Which is why I wanted to focus today on the future, and how credit unions should be preparing for that future.
As our time is limited, I’d like to focus on a single topic that’s at the forefront of my mind: the promise of financial technology. We should have time to cover other issues in the discussion to follow.
I’ll begin with an anecdote: Two weeks ago, I spoke with the president of a financial institution in Charlottesville, Virginia. Earlier this year, they started providing Bitcoin access at their branch locations and ATMs. Not exactly something you expect to hear from a small financial institution, right?
But their customers had expressed interest in crypto-currency, and so they decided to experiment with Bitcoin to gauge the response. As he put it, they wanted to prove that smaller institutions could be just as innovative as the big national players.
Now, time will tell how this plays out. As I noted, we should view it as an experiment in customer service for now, until we have more data. But I’m impressed that this small institution is taking such a forward-leaning approach, because that’s an important part of being competitive in today’s marketplace.
Now, let me pause to clarify, I am not saying that credit unions should rush into Bitcoin. But I am encouraging you to look carefully at these technological tools – whether it’s crypto-currencies, or digital payment platforms, or blockchain applications, financial data aggregation, remote capture check deposit – the list goes on and on – and think very hard about how they may, or may not, fit into your business models. I also want to publicly thank NCUA Vice Chairman Kyle Hauptman for leading on the crypto issue at the agency. Be on the lookout for future regulatory guidance on this important topic.
Because an undeniable challenge that your institutions face — and all financial services providers for that matter — is how to continue growing and prospering in a crowded marketplace. And one way to compete effectively, as this small institution in Virginia recognized, is by looking very closely at these fintech solutions and determining how they can be of value to your members.
I’m not telling you anything you don’t know. But as a regulator, I want you to understand my thinking on this, because as we know, it’s too often been the case that regulators have ended up behind the curve on confronting technological changes. I’m determined to not let the NCUA get caught flat-footed by the rapidly changing technology marketplace.
That’s why last year, as NCUA chairman, I worked to establish a new Office for Financial Technology and Access, which will focus on the regulatory and supervisory needs related to fintech. We recognize these technologies are going to play a growing role in financial services in the years to come, so we want to be prepared to ensure they’re effectively integrated with the needs of credit unions and your members.
The good news is that my successor in the chairman’s position, Todd Harper, is carrying on the important work of getting that office set up. In fact, the job announcement for the director of the new office was published last week. My hope is that this office will be a source of insight and guidance as you navigate these uncharted waters, so I urge you to keep a close eye on that.
As a regulator, I don’t want to hamper your ability to explore and test these new tools. Because that’s what they are: tools. And what we always want to remember is that it’s not enough to use the tool – you have to know how to wield it wisely and skillfully.
So, for instance, we’ll want to think carefully about how to integrate these tools in way that respects your members’ privacy and data security – those are important components of consumer protection.
Also, it’s vitally important that these technological tools advance our commitment to financial inclusion and equity. I’m especially interested in seeing how these tools can be deployed to help underprivileged and marginalized populations and communities, where there’s a great opportunity to make a real difference when it comes to inclusion.
I’ve only scratched the surface of this topic, and I’m happy to expand upon these issues in further discussion. Additionally, I want to be very clear: fintechs that want to act like a credit union or bank should be regulated as such. Dan Berger and NAFCU have really been at the forefront of this safety and soundness issue, and I applaud you, Dan, for it.
But my bottom line is that I want to encourage you all to explore the potentialities of these tools, and as a regulator, I want you to have the flexibility to do so. I want NCUA to lead on this issue, and I don’t want our examiners penalizing you for using these digital tools.
It’s been said that, “The future is uncertain… but this uncertainty is at the very heart of human creativity.” One of the key lessons we should take from this last year is that fostering a sense of resiliency is critical to facing the challenges and opportunities that come with uncertain times. Now it’s time to start applying our creativity to address the very real challenges we face and determining with greater clarity how credit unions will make the most of these promising financial technology tools.
Thank you very much.