FRB Governor Brainard Examines Unique Challenges Fintech Poses For Banks

Federal Reserve Board Governor Lael Brainard described some of the unique challenges FinTech poses for the highly regulated financial sector. At a conference hosted by the Northwestern University Kellogg School of Management, Ms. Brainard considered questions presented by the integration of new technology into the decades-old systems currently used by banks. Ms. Brainard argued that greater attention should be paid to banking regulations that ensure that the customer is protected from loss and shielded from fraud.

Ms. Brainard opined that the Board of Governors of the Federal Reserve will have to strike a balance between allowing "socially beneficial innovations to flourish" and ensuring that institutions "are operated safely and soundly and that they comply with applicable statutes and regulation." She acknowledged that to accomplish this, the agency likely will need to evaluate current vendor risk management guidance and "periodically assess whether and how