Earlier this month, I represented my debt-recovery startup at the fintech summit hosted by the White House. The meeting brought together the usual suspects of the booming fintech ecosystem: investors, founders, executives and regulators from segments as varied as wealth management and debt collection.
It is refreshing to see the government so open to learning more about what drives innovation and how the public sector can help push innovation forward. Conferences such as the White House summit are helpful in exposing both private companies and regulators to new fintech ideas as well as generally opening the lines of communication.
But it's also clear that we are still in the very early stages of the government-innovator conversation.
The government is not a single entity. It is made up of multiple agencies, policy teams and other bodies. Each have their own ideas and own agenda, which are sometimes conflicting, about the aspects of innovation to promote and those that trigger concerns.
For example, the Consumer Financial Protection Bureau, Federal Communications Commission, Department of Commerce and Federal Trade Commission all have varying views of fintech. They also have very different rulemaking responsibilities and are on different timelines, not to mention varying levels of interfacing with the industry. Just as varied are different fintech market players in terms of their openness to regulation.
The early engagement between the government and fintech companies poses the question: What can we do better?
First, there needs to be a more formal model for engaging with government agencies. The CFPB is leading this charge with Project Catalyst, which is designed to engage innovators in an organized manner. As part of the initiative, the bureau has office hours for companies to use to schedule time with the CFPB, and sometimes the agency runs pilot programs to test out certain ideas.
A great first step would be for all agencies that engage with startups to have forums similar to the CFPB's. Making these forums work is a two-way street: As important as it is for the government to establish a line of communication, startups must use those channels to educate regulators about their work, in addition to learning about the issues of importance to policymakers. And this is a responsibility that should fall to the startup's CEO. It cannot be neglected or left to a government relations person. Engagement should come early and it should be structured.
Number two, define goals for these engagements. Is there an upcoming regulation that should guide the discussions? Is the regulator soliciting feedback from the industry that can influence the regulatory policy, or in need of qualitative as well as quantitative information from the industry? Data obtained by the government from fintech companies can help strengthen rules. Regulators may be able to use these engagements to test new policy concepts on specific startups to create blueprints for policy moving forward.
These meetings can also help industry players prepare to comply with an upcoming rule. Startups are in the business of adapting to their market, and getting this guidance from the regulator will allow them to conform.
Finally, these meetings should provide a venue for innovators to hone the experimentation process for new products and ideas by sharing those ideas with policymakers. This is another point that was mentioned in the conference and it is extremely important. The CFPB is again leading the charge by experimentation via Project Catalyst and providing a framework for No Action Letters, a policy to allow innovators to tell the CFPB about a product they want to launch, and to get the CFPB's commitment in advance that the idea is not subject to enforcement proceedings. We have to provide ways for startups to run their craziest ideas by agencies to get a sense if these are products that regulators can accept.
There is a lot of opportunity in the government-startup bond. It can lead to the birth of new industries and new playbooks. As the White House fintech summit participants articulated, finding the right interfaces and methods to do so is critical.
Ohad Samet is a co-founder and chief executive of the debt-recovery company TrueAccord. Follow him on Twitter @ohadsamet.