Traditional banks should help govern fintech: Fed’s Brainard

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WASHINGTON (Reuters) – Traditional lenders should demand that online financial companies protect consumer privacy and money interests, Federal Reserve Governor Lael Brainard said on Thursday.

“Banks have considerable influence,” Brainard said of the relationship between conventional lenders and online operators.

Banks often pay tech companies for the information they gather on borrowers. For that reason, Brainard said, those lenders can set high standards in consumer protection and privacy.

“Banks have a stake in ensuring that their vendors and third-party service providers act appropriately, that consumers are protected and treated fairly, and that the banks’ reputations aren’t exposed to unnecessary risk,” she said in prepared remarks at a fintech conference at the University of Michigan.

The Federal Reserve has broad authority to police the banking industry and Brainard said technology has given more clients financial options. Lenders need to ensure that customer privacy is sacrosanct, said Brainard.