The Promise of Financial Technology. NCUA Board Member Rodney Hood

KEY WEST, Fla.–In what he said were his first remarks before a live audience in a year, NCUA Board Member Rodney Hood told a NAFCU meeting here he believes attention to financial technology (fintech) should be a priority, and that the agency will have some related regulatory guidance coming in the near future.

Speaking to NAFCU’s CEOs and Senior Executives Conference here, Hood told his audience that as the pandemic subsides he wanted to focus his remarks on a single topic: “the promise of financial technology.”

He related a discussion he had with the president of a small financial institution in Charlottesville, Va., that earlier this year started providing Bitcoin access at its branch locations and ATMs after customers had expressed interest.

“They wanted to prove that smaller institutions could be just as innovative as the big national players,” said Hood. “Now, time will tell how this plays out. As I noted, we should view it as an experiment in customer service for now, until we have more data. But I’m impressed that this small institution is taking such a forward-leaning approach, because that’s an important part of being competitive in today’s marketplace.”

No ‘Rush,’ But…

Hood stressed he is not urging credit unions to “rush into” Bitcoin, but he is encouraging credit unions to look at a variety of technologies, including crypto-currencies, digital payment platforms, blockchain, financial data aggregation, remote capture and more.

Hood said NCUA Vice Chairman Kyle Hauptman is leading the exploration of crypto-related issues at the agency and that future regulatory guidance would be forthcoming.

“I’m not telling you anything you don’t know. But as a regulator, I want you to understand my thinking on this, because as we know, it’s too often been the case that regulators have ended up behind the curve on confronting technological changes,” said Hood. “I’m determined to not let the NCUA get caught flat-footed by the rapidly changing technology marketplace.”

Hood said NCUA’s new Office for Financial Technology and Access, which was created while Hood was chairman, will focus on the regulatory and supervisory needs related to fintech.

‘Think Carefully’

Hood urged credit unions to “think carefully” about how to integrate the tools in way that respects members’ privacy and data security.

When it comes to fintechs, Hood said he wanted to be “very clear” he believes those that “act like a credit union or bank should be regulated as such,” an issue on which NAFCU has also been outspoken.

“But my bottom line is that I want to encourage you all to explore the potentialities of these tools, and as a regulator, I want you to have the flexibility to do so,” said Hood. “I want NCUA to lead on this issue, and I don’t want our examiners penalizing you for using these digital tools.”