The pursuit of improvements in the payments system to expand access to the financial system must avoid the temptation to exclusively rely on new technology, Federal Reserve Governor Michelle Bowman said.
Policy Role: Speaking in South Africa, Bowman said policymakers must also consider many policy choices to improve domestic and cross-border payment infrastructures that would promote financial inclusion.
Fed Efforts: Bowman cited interagency statements on small-dollar lending and using alternative data in credit underwriting, the launch of the FedNow Service, and the Fed’s adoption of the ISO 20022 messaging standard as examples of the agency’s support for responsible innovation in payments and inclusion.
Industry Effectiveness: “In my view, the payment system and the broader economy are most efficient and effective when there is broad participation, when unnecessary frictions are minimized, and when banks, especially smaller financial institutions, can provide services to meet consumer demand in a safe and sound manner,” she said.
