A bank charter is the the opposite. Banks are constrained by what regulators will permit. Innovation must be deliberate, documented, well-controlled, and subject to regulatory veto.
Neither approach is unversally “right” or “wrong”. There is a need for safety & soundness and consumer protections. But huge benefits come from experimentation and iteration.
The real challenge is where the two worlds intersect. How do we upgrade our regulated instutitions with high-impact innovations while keeping systemic risks properly controlled? How do we incentivize fintech innovation while ensuring licensed firms can compete on a level playing field?
You can see what happens when the pendulum swings too far. In the Pacific Palisades, building permits are issued at an inexplicably slow pace. Vacant lots sit idle after more than a year of waiting to rebuild.
You can also see the potential of “moving fast and breaking things”. Tesla cars drive autonomously with software version 14.2.2.4. It’s been 10 years since the fist version. Waymo and Baidu have made similar progress.
But these cars follow the rules of the road.
Similarly, fintechs operate in a world with complex regulations around banking, finance, KYC, AML, capital & liquidity, and consumer compliance.
With all of the innovations in the lab and on the test track, they need to follow the rules of the road.
