The news: A Fed official suggested updates to big bank merger rules to account for increasing competition from fintechs, per Market Watch.
What are the updates? Fed Governor Michelle Bowman called some of the rules regarding big bank mergers “outdated” and said that the Federal Reserve Board should consider updating them to reflect the impact fintechs now have on the banking industry. The merger rules were last updated in 1995.
Bank mergers on the brain: Bank mergers have been a popular conversation topic this year. Nearly all bank merger deals since 2003 have been approved, which led the Biden administration to slow down the reviews and look at overhauling the approval process.
A new landscape emerging: Digitalization, consumer tastes and preferences, and new entrants have significantly changed the banking landscape over the past decade. Consumers have more options for meeting their financial needs than ever. That sometimes results in their interacting with multiple companies, rather than relying on a single bank for everything.
Our take: The proliferation of fintech and nonbank entrants within the banking space has increased competition and prompted calls for tighter regulation of these entities. As US watchdogs modernize their rules and review processes, they must ensure they truly reflect a financial services environment that’s brimming with fintech and nonbank competitors.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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