I regularly work with technology innovators to help them get their ideas cleaned up for financial institutions and to give them a headstart in understanding the types of risk concerns and controls that financial institutions are going to have and want. To technology innovators who may be intrigued by the CFPB’s request for dialogue, I wanted to provide my thoughts on some steps to take before charging through the Project Catalyst doors and throwing your ideas in front of the CFPB.
On the face of it, the CFPB has asked technology innovators to provide simple information – just tell them who you are and what your ideas are. But, they immediately follow that request by pointing to the regulations the CFPB enforces and their supervision and examination manual. What does that mean?
I think it means that when you present ideas to the CFPB, you should do the following:
1. Be clear about the types of consumer financial products or services to which the innovation will apply. In other words, if the innovation is something intended only to affect deposit products and not mortgages, then, you should say that.
2. Understand, at least at a very basic level, what consumer disclosures may be required because the innovation will be used with a specific type of consumer product or service. Mention those disclosures in your submission to the CFPB and, if applicable, provide information about how the consumer would receive those disclosures.
3. Provide high-level information about fees that could be charged for the innovative product or service.
4. In describing the idea, talk about how the innovative product or service would be combined with an existing consumer financial product or service, what data would be required for the innovation to work properly and how the consumer would know about and take advantage of the innovation.
5. If the innovation requires incursions into the consumer’s privacy or requires consumer personally-identifiable information, talk about how the innovation addresses disclosure of the use of PII and how the PII will be securely protected.
6. Finally, as with any presentation of new technology, I think it is also very useful to have a couple of use-case scenarios that illustrate the difference the technology innovation will make to the average consumer.