By Lauren Bikoff, MLS
Federal Reserve Board Governor Jerome H. Powell spoke on Oct. 18, 2017, at the 41st Annual Central Banking Seminar about the need for banks and fintech firms to collaborate "to achieve a safe and fast payments system that meets the evolving needs of consumers and our dynamic economy." In his speech, entitled "Financial Innovation: A World in Transition," Powell noted that rapidly changing technology means that banks and fintech firms are striving to address consumer demands for more timely and convenient payments, but this innovation should not "come at the cost of a safe and secure payment system that retains the confidence of its end users." Banks and fintech firms must both play a role in achieving this goal, he noted.
According to Powell, "We are at a critical juncture in the payment system's evolution, where technology is rapidly changing many facets of the payments process. Fintech firms and banks are seizing these technological changes in their own ways. But a collective and collaborative effort by all payment stakeholders will also be important as the United States works to achieve a payment system that has broad reach and can seamlessly integrate with other systems to transfer funds in a reliable, secure, and convenient manner. When we pay with cash or write a check, we don't spend a lot of time worrying about who our recipient banks [work] with; that universality seems an appropriate standard for new payment options as well."
Faster Payments Task Force. Powell then highlighted the work of the Faster Payments Task Force, which was launched five years ago through the Fed’s payment system improvement initiative. More than 300 stakeholders, including banks, fintech companies, consumer groups, regulators, and others, joined the Task Force. Its mission was to identify and assess alternative approaches for implementing a safe, ubiquitous, faster payment system in the U.S. Sixteen proposals were submitted by the Task Force, and Powell noted that these proposals represent "a broad universe of creative and innovate ways to deliver faster payments by embracing technology."
One such recommendation was to establish an industry governance framework for collaboration and decision-making on faster payments. Therefore, the Governance Framework Formation Team was created to develop, publish, and solicit public comment on a proposal for governance framework, Powell stated.
MainStory: TopStory BankingOperations ChecksElectronicTransfers FederalReserveSystem FinTech
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