American presidential election results may have an impact on the development of the fintech industry in the United States, as well as decide the fate of certain segments of the credit market. Business Insider media predicted what changes to expect in the industry if Donald Trump and Joe Biden wins.
At press time, Democratic candidate Joe Biden is slightly ahead, but incumbent President Donald Trump appears to have a chance of winning.
Over the past four years, the incumbent administration has managed to ease some aspects of financial regulation. For example, CFPB changed the rules for microfinance organizations. Now they don’t have to monitor the credit capacity of their clients. According to consumer advocates, this has already led to the fact that many borrowers have to endlessly refinance to pay off current debt, while interest rates on these loans can reach 400%.
The initiative was criticized by Biden, who said that the decision to ease restrictions on the predatory behavior of microfinance institutions is shameful in itself. This talks of the fundamentally different approaches of Trump and Biden in relation to regulation in financial markets, exactly the opposite. In case of re-election, the current head of the White House will almost certainly continue to weaken him, and Biden, on the contrary, will try to strengthen supervision and focus on consumer protection, the publication suggests.
This is confirmed by one of Biden’s initiatives, which proposed the creation of a government credit bureau, competing with companies such as Equifax and TransUnion. According to the former vice president, this will allow to level of the conditions in which bank clients belonging to different races are, as well as to generally reduce their dependence on the actions and decisions of credit institutions.
The regulation of access to personal data of users is one of the main legal gaps in the current US legislation. At the moment, the country lacks federal regulatory standards like PSD2, which enshrines the basic standards of open banking in Europe.
The rules for the exchange of personal information of users in the United States are not regulated by law, but at the level of individual banks that do not want to share it with other market players, thus slowing down the introduction of financial technologies. A victory for Biden, who previously said that the United States should introduce standards similar to GDPR, may change the situation. This will give American users more ownership of their personal data, which can be accessed by fintech companies, which will increase competition in the financial sector.
In turn, Trump openly criticized the GDPR for helping cybercriminals evade responsibility. Therefore, if the current president wins in the United States, additional restrictions on the exchange of user information may be introduced.
Trump has several times imposed restrictions on the number of visas issued by the US authorities to qualified employees from other countries. In June, his administration suspended visa applications for foreign workers until the end of 2020. In October, new restrictions on foreigners were announced regarding salary restrictions for foreigners traveling to the country on an H-1B visa. The number of workers from foreign countries who come to work in the United States on this type of visa is 85 thousand people per year, with more than 69% working in IT.
The restrictions imposed by Trump could cut the number of skilled workers entering the country by about a third. Representatives of nearly 300 companies have openly opposed these restrictions by sending letters to the presidential administration.
Biden said that if he wins, he will lift restrictions on H-1B visas. Such a solution will help avoid additional problems for American fintech (cryptocurrency) companies, which already now feel a shortage of talented developers.
However, despite the difference in the views of the two candidates, American fintech will continue to actively develop in any case, Business Insider suggests. First of all, due to the fact that it will retain practically unlimited access to big capital – American investors account for half of the world’s investments in the fintech industry.
The fintech and start-up market will grow, the main directions will be payments, lending, scoring, etc. Regulators will democratize access to anonymized data, thereby undermining the monopoly of banks and financial institutions