The CFPB and the Future of Financial Services

Our friends at the Center for Financial Services Innovation recently led a marketplace-wide research effort to understand how impending changes – in demographics, the macroeconomic environment, regulation and legislation, technology, cultural paradigms, and institutional dynamics – will affect the structure of the financial services industry. On the basis of the findings, CFSI developed a set of recommendations for how organizations focused on asset-building can craft strategies that leverage recent trends influencing the financial services industry.

Our Ray Boshara advised the project and spoke on the webinar CFSI held to release their recommendations. The focus of his remarks was on the potential impact of the new Consumer Financial Protection Bureau (CFPB) on financial services policy, and how this impact intersects with CFSI’s recommendations for the asset-building field. He offered five potential impacts of the CFPB, noting that the agency is still young but is poised – provided it receives regular and substantive input from the field – to make significant improvements in the financial lives of low-income families. This point about input from the field is critical, and the good news is that Elizabeth Warren seems to see it the same way. According to Ray, the CFPB will:

(a) level the playing field, establishing a national “floor” for consumer protections below which states could not fall;

(b) move toward more traditional and less innovative products, an observation in healthy tension with the further innovation CFSI sees in the financial services field;

(c) propose products and regulations that are good for both consumers and financial institutions – the “double bottom line” approach that is consistent with CFSI’s recommendations;

(d) set higher standards for both consumers and financial institutions to get in the wealth-building game – which, also mirroring CFSI’s recommendations, will probably result in costlier financial services and require potential asset owners to come to the table with more “skin in the game”; and

(e) lead to more financial capability, given that the CFPB’s mandate revolves around both financial products and consumer behavior.

Watch the entire webinar here.