Banks hope to persuade Biden admin that Big Tech and fintech startups should not be able to offer services that compete with banks without facing the same rules
Banks see a chance to direct tougher regulation against Facebook, Google and fintechs — Wall Street executives see the prospect … Tweets: @hoofnagle , @richardturrin , and @financialtimes Tweets: Chris Hoofnagle / @hoofnagle : FT: “Bank lobbyists and executives say a priority will be persuading the incoming administration that tech giants such as Facebook and Google, ...should not be allowed to provide services that compete with banks without being subject to the same rules.” https://www.ft.com/... Richard Turrin / @richardturrin : Banks see a chance to direct tougher regulation against Facebook, Google and fintechs. Anyone surprised? @psb_dc @thepsironi @efipm @BrettKing @leimer @spirosmargaris @BetaMoroney @jimmarous @fintechna #fintech #banking #innovation #technology https://www.ft.com/... @financialtimes : Banks see tougher regulation under the Biden administration as a threat — but also as a chance to neutralise a new generation of high-tech competitors https://www.ft.com/...
Context & Ripple Effects
The banks' lobbying push lands in an unusually receptive window: Democrats are already urging Biden to move fast on tech regulation before Republicans can retake Congress, and tech giants have been bracing for a tougher posture from the administration since January. Wall Street's play is to fold financial-services competition into that agenda.
The competitive threat is concrete rather than hypothetical. VC-funded neo-banks like Chime, Aspiration and Varo have been undercutting big consumer banks on fees for years, while fintechs such as Square handle payments by renting banking licenses through intermediaries like Cambr — structures that let them offer bank-like products without carrying a bank's full regulatory load.
First-order effects
- If the administration adopts the banks' framing, Facebook, Google and fintech startups offering payments or deposit-like products would face capital, compliance and supervision costs they currently avoid, directly raising their cost of serving customers.
- Neo-banks built on light-touch sponsorship arrangements — the Cambr-style license-rental model — become the most exposed named players, since their economics depend on not being chartered banks themselves.
Second-order effects
- Fintechs would likely respond by seeking their own banking charters or deepening ties with sponsor banks, converting today's license-rental arbitrage into formal charter applications that regulators must then adjudicate.
- Big consumer banks gain pricing room: if the cheapest competitors absorb bank-equivalent compliance costs, the fee-and-rate gap that neo-banks exploited narrows without the incumbents changing their own behavior.
Third-order effects
- The underlying principle at stake is activity-based regulation — same product, same rules regardless of whether the provider is a bank or a platform — which, if adopted, sets a template other regulated industries can invoke against Big Tech entrants.
- Combined with the EU's Digital Markets Act, where US tech firms failed to win substantial changes and shifted to compliance mode, the pattern points toward Big Tech losing the lobbying battle on regulatory perimeters and adapting structurally instead — through charters, acquisitions, or exiting contested financial products.
The trend: As Washington's regulatory posture toward Big Tech hardens, incumbent industries are learning to route their competitive grievances through the same regulatory machinery, with financial services the first test of 'same activity, same rules.'