Table Of ContentU . S . D E P A R T M E N T O F T H E T R E A S U R Y
A Financial System
That Creates Economic Opportunities
Nonbank Financials, Fintech,
and Innovation
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JULY 2018
2018-04417 (Rev. 1) • Department of the Treasury • Departmental Offces • www.treasury.gov
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A Financial System That Creates Economic Opportunities Nonbank Financials, Fintech, and Innovation TREASURY
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U . S . D E P A R T M E N T O F T H E T R E A S U R Y
A Financial System
That Creates Economic Opportunities
Nonbank Financials, Fintech,
and Innovation
Report to President Donald J. Trump
Executive Order 13772 on Core Principles
for Regulating the United States Financial System
Steven T. Mnuchin
Secretary
Craig S. Phillips
Counselor to the Secretary
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Staff Acknowledgments
Secretary Mnuchin and Counselor Phillips would like to thank Treasury staff members for
their contributions to this report. The staff’s work on the report was led by Jessica Renier
and W. Moses Kim, and included contributions from Chloe Cabot, Dan Dorman, Alexan-
dra Friedman, Eric Froman, Dan Greenland, Gerry Hughes, Alexander Jackson, Danielle
Johnson-Kutch, Ben Lachmann, Natalia Li, Daniel McCarty, John McGrail, Amyn Moolji,
Brian Morgenstern, Daren Small-Moyers, Mark Nelson, Peter Nickoloff, Bimal Patel,
Brian Peretti, Scott Rembrandt, Ed Roback, Ranya Rotolo, Jared Sawyer, Steven Seitz,
Brian Smith, Mark Uyeda, Anne Wallwork, and Christopher Weaver.
ii A Financial System That Creates Economic Opportunities • Nonbank Financials, Fintech, and Innovation
Table of Contents
Executive Summary 1
Nonbank Financials, Fintech, and Innovation 4
Emerging Trends in Financial Intermediation 6
Summary of Issues and Recommendations 9
Embracing Digitization, Data, and Technology 15
Digitization 17
Consumer Financial Data 22
Te Potential of Scale 44
Aligning the Regulatory Framework to Promote Innovation 61
Challenges with State and Federal Regulatory Frameworks 63
Modernizing Regulatory Frameworks for National Activities 66
Updating Activity-Specifc Regulations 81
Lending and Servicing 83
Payments 144
Wealth Management and Digital Financial Planning 159
Enabling the Policy Environment 165
Agile and Efective Regulation for a 21st Century Economy 167
International Approaches and Considerations 177
Appendices
Appendix A: Participants in the Executive Order Engagement Process 187
Appendix B: Table of Recommendations 195
Appendix C: Additional Background 213
A Financial System That Creates Economic Opportunities • Nonbank Financials, Fintech, and Innovation iii
Acronyms and Abbreviations
Acronym/Abbreviation Term
ABA American Bankers Association
ACH Automated Clearing House
AI Artifcial Intelligence
AMC Appraisal Management Company
AML Anti-Money Laundering
API Application Programming Interface
APR Annual Percentage Rate
AQB Appraiser Qualifcations Board
ASB Appraisal Standards Board
ATM Automated Teller Machine
AVM Automated Valuation Model
BHC Bank Holding Company
BHC Act Bank Holding Company Act
BSA Bank Secrecy Act
Bureau Bureau of Consumer Financial Protection
CEG Cybersecurity Expert Group
C.F.R. Code of Federal Regulations
CFT Countering the Financing of Terrorism
CFTC U.S. Commodity Futures Trading Commission
CHAPS Clearing House Automated Payment System
CHIPS Clearing House Interbank Payments System
CMA Competition and Markets Authority (U.K.)
CRA Community Reinvestment Act
CROA Credit Repair Organizations Act
CSBS Conference of State Bank Supervisors
Cyber Apex Next Generation Cyber Infrastructure Apex Program
DARPA Defense Advanced Research Projects Agency
DHS U.S. Department of Homeland Security
DIUx Defense Innovation Unit Experimental
iv A Financial System That Creates Economic Opportunities • Nonbank Financials, Fintech, and Innovation
DLT Distributed Ledger Technology
DOD U.S. Department of Defense
Dodd-Frank Dodd-Frank Wall Street Reform and Consumer Protection Act
DOJ U.S. Department of Justice
DOL U.S. Department of Labor
Education U.S. Department of Education
EMV Europay, Mastercard, and Visa
ESIGN Electronic Signatures in Global and National Commerce Act
E.U. European Union
FATF Financial Action Task Force
FBIIC Financial and Banking Information Infrastructure Committee
FCA False Claims Act
FCA U.K. Financial Conduct Authority
FCC Federal Communications Commission
FCRA Fair Credit Reporting Act
FDCPA Fair Debt Collection Practices Act
FDIC Federal Deposit Insurance Corporation
FedACH Federal Reserve Banks’ Automated Clearing House
FFIEC Federal Financial Institutions Examination Council
FHA Federal Housing Administration
FHA-HAMP FHA Home Afordable Modifcation Program
FHFA Federal Housing Finance Agency
FHLB Federal Home Loan Bank
FICO Fair Isaac Corporation
FIL Financial Institutions Letter
FinCEN Financial Crimes Enforcement Network
FINRA Financial Industry Regulatory Authority
Fintech Financial Technology
FIRREA Financial Institutions Reform, Recovery, and Enforcement Act
FlexMod GSE Flex Modifcation
FPS Faster Payments Service (U.K.)
A Financial System That Creates Economic Opportunities • Nonbank Financials, Fintech, and Innovation v
FRB Board of Governors of the Federal Reserve System
FRBNY Federal Reserve Bank of New York
FSB Financial Stability Board
FS-ISAC Financial Services Information Sharing and Analysis Center
FTC Federal Trade Commission
G-7 Group of 7
G20 Group of 20
GAO U.S. Government Accountability Ofce
GDP Gross Domestic Product
GDPR General Data Protection Regulation (E.U.)
GLBA Gramm-Leach-Bliley Act
GRC Governance, Risk and Compliance
GSE Government-Sponsored Enterprise
HUD U.S. Department of Housing and Urban Development
IaaS Infrastructure as a Service
IRS Internal Revenue Service
ISO International Organization for Standardization
IT Information Technology
LOA Levels of Assurance
MAS Monetary Authority of Singapore
MBA Mortgage Bankers Association
MBS Mortgage-Backed Securities
MCSBA Maryland Credit Services Business Act
MERS Mortgage Electronic Registration System
MMIF Mutual Mortgage Insurance Fund
MPL Marketplace Lender
MSB Money Services Business
MTRA Money Transmitter Regulators Association
NACHA National Automated Clearinghouse Association
NAIC National Association of Insurance Commissioners
NBA National Bank Act
vi A Financial System That Creates Economic Opportunities • Nonbank Financials, Fintech, and Innovation
NCUA National Credit Union Administration
NFC Near Field Communication
NIST National Institute of Standards and Technology
NMLS Nationwide Mortgage Licensing System or Nationwide Multistate
Licensing System
NSF National Science Foundation
NSS National Settlement Service
OBIE Open Banking Implementation Entity (U.K.)
OCC Ofce of the Comptroller of the Currency
OFX Open Financial Exchange
P2P Person-to-Person or Peer-to-Peer
PaaS Platform as a Service
PCI-DSS Payment Card Industry Data Security Standard
PII Personally Identifable Information
PIN Personal Identifcation Number
PLS Private-Label Securities
PSD2 Revised Payment Services Directive (E.U.)
PSP Payment Service Provider
RTP Real Time Payments
SaaS Software as a Service
SAFE Act Secure and Fair Enforcement for Mortgage Licensing Act
SEC U.S. Securities and Exchange Commission
SIFMA Securities Industry and Financial Markets Association
SRO Self-Regulatory Organization
SWIFT Society for Worldwide Interbank Financial Telecommunication
SWIFT GPI Society for Worldwide Interbank Financial Telecommunication Global
Payments Innovation
TCH Te Clearing House
TCPA Telephone Consumer Protection Act
TFFT Basel Committee on Banking Supervision’s Task Force on Financial
Technology
Treasury U.S. Department of the Treasury
A Financial System That Creates Economic Opportunities • Nonbank Financials, Fintech, and Innovation vii
U.K. United Kingdom
U.S. United States
UDAAP Unfair, Deceptive, or Abusive Acts or Practices
UDAP Unfair or Deceptive Acts or Practices
UETA Uniform Electronic Transactions Act
URPERA Uniform Real Property Electronic Recording Act
U.S.C. United States Code
USDA U.S. Department of Agriculture
USPAP Uniform Standards of Professional Appraisal Practice
VA U.S. Department of Veterans Afairs
ZB Zettabyte
viii A Financial System That Creates Economic Opportunities • Nonbank Financials, Fintech, and Innovation
Executive Summary
