The Federal Deposit Insurance Corp. will set up an office of innovation to foster a more welcoming environment for banks to adopt financial technology changes, the agency's chief said Tuesday.
FDIC Chair Jelena McWilliams told an American Bankers Association conference in New York that federal bank regulators could do a better job of encouraging institutions to innovate, which is partly why the most dynamic changes are occurring outside the banking industry.
"We have created the regulatory framework where we have actually discouraged banks from innovating for a number of years,” McWilliams said. “So innovation has been happening outside of the banking primarily and a very small percentage of it has happened within the community banks in particular that don’t have the resources, nor are they able to enforce the compliance mechanisms in place that would be needed where the regulators would look positively at innovation.”
Read more in American Banker.