CSBS Issue Briefings - January 2020

CSBS ISSUE BRIEFING

Vision 2020

CSBS Official Position In May 2017, CSBS members adopted a policy statement committing state regulators to move towards an integrated, 50-state system of licensing and supervision for nonbanks, including fintech firms, while promoting strong consumer protections. Achieving this goal involves several CSBS and state initiatives. We refer to these initiatives collectively as CSBS Vision 2020.

Summary CSBS Vision 2020 includes:

1. Industry Engagement: Through our Fintech Industry Advisory Panel (FIAP), we brought together 33 firms to identify state licensing and regulation “pain points.” In February 2019, we released the FIAP’s recommendations and announced the steps the states and CSBS are taking to smooth the licensing and supervision of nonbanks across the nation while strengthening consumer protections and local accountability. These next steps focus on forging common definitions and practices, increasing transparency and expanding the use of common technology. In December 2019, CSBS issued a FIAP Accountability Report to update FIAP companies and other stakeholders on progress in addressing the FIAP’s recommendations. 2. Next-generation technology platform: CSBS is building a new end-to-end technology platform that will span from licensing through supervision, dramatically improving the multistate experience. The platform includes a new state examinationsystem, which we piloted during the fall of 2019. 3. Harmonize multistate licensing and supervision : State regulators and CSBS have several initiatives underway to bring more efficiency and standardization to licensing and supervision. • In 2019, we conducted a One Company, One Exam pilot that has now evolved to a greater commitment to a networked approach to supervision greater reliance and sharing of exam work and information. • The states are working on a model approach to MSB licensing requirements and processes. • The states are in the early stages of developing a consumer finance call report. As the mortgage and MSB call reports have done, the consumer finance call report’s goal will be to improve the information reported to regulators while bringing greater consistency to reporting requirements. 4. Better tools for navigating the state system: CSBS is developing several tools and resources to bring greater transparency to state nonbank supervision and licensing. In 2019, we launched a repository of state guidances related to non-bank licensing and supervision as well as surveys of certain areas of state MSB laws. Early this year, we will roll out a 50-state consumer finance law survey. 5. Assist state banking departments : To help better regulate banks and nonbanks CSBS has trained hundreds of state regulators as part of a nationwide cyber training initiative, developed amodel cyber regulation, and is finalizing anMSB accreditation program. 6. Improve third party supervision: Banks seeks to partner with a variety of companies, including many who consider themselves fintechs. The Bank Service Company Examination Coordination Act (H.R. 241) would amend the Bank Services Company Act to allow better federal-state coordination in supervising third-party vendors. The House unanimously approved the measure by a voice vote in September. CSBS urges the Senate to do the same, as the bill would support

FOR STATE REGULATOR USE ONLY