As survey after survey shows that consumers want to use their phones as mini-banks, financial institutions face significant strategic challenges arising not just from the need quickly to innovate, but also from the regulatory vacuum surrounding mobile financial services.  If new entrants are not just quicker than traditional banks, but also advantaged by the absence of costly rules, then the retail-payment system will change dramatically from a competitive perspective even as an array of new market and consumer risks results. 

We have addressed these in numerous client reports, as well as a recent paper for the Federal Reserve Bank of Chicago.  Many had anticipated that the CFPB would take on this critical regulatory question when it turned to mobile financial services.  However, a recent Federal Financial Analytics assessment concludes that the Bureau’s focus is more on opening mobile finance than on regulating it.  Focusing on the question of how new technology can reach under-served groups, the CFPB wants public input into new products and services such as paying for goods through mobile-phone bills.  It is unclear if the bureau would try to extend protections to consumers using any of the new technologies it blesses. Even if it were to try to do so by rule, it is most unclear how well it could do so under current law.

If you would like to see FedFin’s report, please email us at or call 202-589-0880.  Let us know also if you would like to speak with the relevant FedFin staffer or discuss your strategic concerns with our managing partner, Karen Petrou.