KT Fintech Blog

The KT Fintech Blog provides insights into how the emergence of fintech is fundamentally changing virtually every aspect of the financial services landscape and how traditional businesses navigate this rapidly evolving industry.

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Posted on Tuesday, January 30 2018 at 3:00 pm by -

House of Representatives Passes MOBILE Act

By Eamonn K. Moran

On January 29, 2018, the U.S. House of Representatives passed H.R. 1457, the Making Online Banking Initiation Legal and Easy (MOBILE) Act of 2017, in an overwhelming 397-8 vote.  The bipartisan legislation, which provides opportunities for consumers to open bank accounts without having to visit a physical branch, was introduced by Representatives Scott Tipton (R-CO), Randy Hultgren (R-IL), Patrick McHenry (R-NC), David Scott (D-GA), Terri Sewell (D-AL), and Krysten Sinema (D-AZ).

Currently, banks face difficulty implementing verification processes for online and mobile banking accounts due to inconsistent state laws on swiping or copying state-issued identification cards.  While most states permit mobile banking applications to copy licenses for verifying a customer’s identification, a small number do not and the House bill would preempt the conflicting state laws.  The MOBILE Act would streamline the process for consumers wishing to open bank accounts electronically and ensure consumers are protected by the participating bank’s identity theft and financial fraud policies.  The bill would permit financial institutions to use electronic copies of identification for purpose of identity verification.  Specifically, the MOBILE Act would allow financial institutions, with an individual’s consent, to record personal information from a scan, copy or image of a driver’s license or other personal identification card.  It would also allow the institution to store the information electronically when an individual initiates an online request to open an account or obtain a financial product.  The financial institution would be permitted to use the information for the purpose of verifying the authenticity of the driver’s license or identification card, verifying the identity of the individual, or complying with legal requirements.  The financial institution would be required to delete any copy or image of an individual’s driver’s license or personal identification card after use.

This legislation could help the “unbanked” and “underbanked” population in the U.S. access financial services from mobile devices.  The Conference of State Bank Supervisors (CSBS) supports efforts by banks “to innovate in a safe and sound manner to reach unbanked and underbanked consumers, especially in remote areas where the MOBILE Act would have the greatest impact,” it said in a statement.

This bill is similar to a provision in a bipartisan Senate bill (S. 2155) designed to bring regulatory relief to community and regional banks.  Given the overwhelming vote in favor of passage of this bill, coupled with the bipartisan nature of such support, we expect that such or similar legislation may face similar results in the Senate.

Given the overwhelming vote in favor of passage of this bill, coupled with the bipartisan nature of such support, we expect that this legislation will face similar results in the Senate.


Posted on Wednesday, January 17 2018 at 12:03 pm by -

CFPB Acting Director Mulvaney Announces Call for Public Input Regarding CFPB Functions

By Eamonn K. Moran

On January 17, the Consumer Financial Protection Bureau (CFPB or Bureau) announced that it is soliciting public input “to ensure the Bureau is fulfilling its proper and appropriate functions to best protect consumers.”  During the coming weeks, the CFPB will be publishing in the Federal Register a series of Requests for Information (RFIs) seeking comment on the Bureau’s enforcement, supervision, rulemaking, market monitoring, and education activities.  According to the CFPB, these RFIs “will provide an opportunity for the public to submit feedback and suggest ways to improve outcomes for both consumers and covered entities”

“In this New Year, and under new leadership, it is natural for the Bureau to critically examine its policies and practices to ensure they align with the Bureau’s statutory mandate. Moving forward, the Bureau will consistently seek out constructive feedback and welcome ideas for improvement,” stated CFPB Acting Director Mick Mulvaney. “Much can be done to facilitate greater consumer choice and efficient markets, while vigorously enforcing consumer financial law in a way that guarantees due process. I look forward to receiving public comments in response to this call for evidence and encourage all interested parties to participate.”

The CFPB states that its first RFI will seek public comment on Civil Investigative Demands (CIDs), which are issued during an enforcement investigation, and that comments received in response to this RFI will help the Bureau evaluate existing CID processes and procedures, and to determine whether any changes are warranted.

This announcement follows a series of actions taken by the CFPB in recent weeks that demonstrate the influence of the new leadership.  When Mulvaney assumed the role of acting director after Thanksgiving, he imposed a temporary hiring freeze and a freeze on all new regulations and guidance for 30 days, along with a separate freeze on civil penalty payments.  On January 16, the CFPB announced that it intends to engage in a rulemaking process for purposes of reconsideration of the Payday Rule, which was finalized in October 2017.  In a similar fashion, the CFPB announced last month that it intends to engage in a rulemaking to reconsider various aspects of the 2015 Home Mortgage Disclosure Act (HMDA) rule such as the institutional and transactional coverage tests and the rule’s discretionary data points.  We also expect the CFPB to issue a final rule amending certain aspects of its 2016 rule governing prepaid accounts soon.

Stay tuned for further updates and developments!