I stumbled across a story claiming that Starbucks has effectively turned into a bank. The author builds the argument up from an analysis of how it uses its gift cards, a technology they innovated around 2008.
- How Starbucks secretly operates like a bank.
- Is Starbucks Actually a Bank?
It led me down a rabbit hole.
FinTech is short for Financial technology.
So what's that all about?
- Click here for the Wikipedia entry.
Fintech, a portmanteau of "financial technology", refers to firms using new technology to compete with traditional financial methods in the delivery of financial services. Artificial intelligence, blockchain, cloud computing, and big data are regarded as the "ABCD" (four key areas) of fintech. The use of smartphones for mobile banking, investing, borrowing services, and cryptocurrency are examples of technologies designed to make financial services more accessible to the general public. Fintech companies consist of both startups and established financial institutions and technology companies trying to replace or enhance the usage of financial services provided by existing financial companies.
It all falls under the heading of financial services.
What are financial services?
Financial services are economic services provided by the finance industry, which together encompass a broad range of service sector firms that provide financial management, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual asset managers, and some government-sponsored enterprises.
As we discuss in GOVT 2305, the U.S. Constitution contains implied powers that allow for the creation and regulations of banks and other financial institutions. The field is very dynamic however, which leads to calls for new regulations, as well as resistance to those calls.
What are financial regulations?
Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the stability and integrity of the financial system. This may be handled by either a government or non-government organization. Financial regulation has also influenced the structure of banking sectors by increasing the variety of financial products available. Financial regulation forms one of three legal categories which constitutes the content of financial law, the other two being market practices and case law.
Wikipedia lists the following as the major financial regulatory institutions in the United States (at the national level)
U.S. Securities and Exchange Commission (SEC)
Financial Industry Regulatory Authority (FINRA)
Consumer Financial Protection Bureau (CFPB)
Commodity Futures Trading Commission (CFTC)
Federal Reserve System ("Fed")
Federal Deposit Insurance Corporation (FDIC)
Office of the Comptroller of the Currency (OCC)
National Association of Insurance Commissioners (NAIC) (a State-based regulatory standards organization, the McCarran–Ferguson Act exempts the "business of insurance" from most regulation at the Federal level)
National Credit Union Administration (NCUA)
