Menu
Banking Exchange Magazine Logo
Menu

Fed Proposes Changes to Payments System Access

ABA welcomes move after months of opposition to approvals of digital challengers

  • |
  • Written by  Banking Exchange staff
  • |
  • Comments:   DISQUS_COMMENTS
Fed Proposes Changes to Payments System Access

The Federal Reserve (Fed) has proposed new guidelines for assessing requests for master accounts or access to the agency’s financial services.

The proposal comes as growing numbers of fintech firms and other alternative financial services providers are seeking access to the Fed’s payments system.

The American Bankers Association (ABA) – which had previously called for the Fed to establish a set of standards in an op-ed earlier this year – welcomed the action.

The trade body had previously raised concerns that some entities might have been gaining banking licenses without meeting existing standards that apply to ‘traditional’ banks.

“The Fed’s payments system has long been a fortress of safety and efficiency that has benefited millions of consumers, businesses, and the broader economy,” said ABA President and CEO, Rob Nichols.

“To access the system today, banks must meet the highest regulatory standards and face rigorous overnight. We embrace innovation and new business models, but we believe every entity seeking similar access to the Fed’s payments system, including those with novel charters, should meet those same high standards. To do otherwise would put consumers and the financial system at risk.”

Last month, New York fintech Paxos National Trust became the latest non-traditional bank to be conditionally approved for a banking charter by the Office of the Comptroller of the Currency (OCC).

The ABA opposed the application, arguing that the information in its application was “vague” and the descriptions it provided about its cryptocurrency and fiduciary activities were “not sufficient” for a trust charter.

The banking industry has been vocal in its opposition to digital challengers, arguing that they have not been subject to the same levels of scrutiny from regulators as traditional banks.

In general, fintechs face fewer regulations at both state and federal level than traditional financial institutions.

The American Fintech Council and the Financial Technology Association formed in March, as fintechs have sought to challenge traditional banks in providing some services while partnering with them in providing others.

back to top

Sections

About Us

Connect With Us

Resources

Webinar: In-person and Remote Banking –
Why this Hybrid Model is the Future of the Branch

Banks combine the brick and mortar
physical banking experience with virtual banking

Time/Date: August 5th, 2021 2:00 P.M. ET

As consumers increasingly prefer to engage with their bank remotely instead of going to a branch location, institutions are looking to modernize the ways in which they interact with customers. Depending on the complexity of the banking activity, some consumers will use self-service digital channels while others will turn to channels where they can get human help. In a hybrid banking model, banks combine the brick and mortar physical banking experience with virtual banking.

In this webinar, OneSpan and guest speaker Alyson Clarke, Principal Analyst at Forrester Research, will discuss why hybrid banking will become mainstream and the importance of putting the right tools in place to support remote account opening, account maintenance, wealth management, and lending.

REGISTER NOW!

This webinar is brought to you by:
OneSpan Logo