The Consumer Financial Protection Bureau (the “CFPB”) recently announced that it will hold its first Tech Sprint to reduce regulatory burden and improve consumer understanding of financial services. The CFPB describes its Tech Sprints as a model that:
… gather[s] regulators, technologists, financial institutions, and subject matter experts from key stakeholders for several days to work together to develop innovative solutions to clearly-identified challenges. Small teams include participants from both the regulator and a diversity of entities to ensure the inclusion of regulatory, industry, and technology perspectives. The regulator assigns a specific regulatory compliance or market problem to each team and challenges the teams to solve or mitigate the problems using modern technologies and approaches. The teams then work for several days to produce actionable ideas, write computer codes, and present their solutions. On the final day, each team presents to an independent panel of judges that selects winners. The most promising ideas can then be further developed either in collaboration with the regulator or by external parties.
The CPFB has said that these Tech Sprints will be held virtually and will “generate actionable ideas and help inform future disclosure policy options in a range of markets.” The CFPB’s first Tech Sprint will be held October 5-9, 2020, and will focus on “developing a range of innovative approaches to electronically-delivered adverse action notices” required under the Fair Credit Reporting Act and Equal Credit Opportunity Act.
Teams that participate in the October Tech Sprint will be asked to show how electronically-delivered adverse action notices can improve on current notices to realize three core goals:
- Accuracy – using accurate information to take adverse action;
- Anti-discrimination – preventing illegal discrimination in credit decisions; and
- Education – helping consumers fare better in future credit applications.
The problem statement that the CFPB published provides details about the Tech Sprint process, including data, models, and other information that may be used and information about products developed during the sprint, pre- and post-sprint activities. Tech Sprint participants may (but are not required to) apply to the CFPB’s Trial Disclosure Policy, using the results from the Tech Sprint to field test their innovations. Those interested in participating can apply here, but hurry- the deadline for applying is Friday, September 11th.
The October Tech Sprint is being conducted in the context of a larger effort of the CFPB considering “a range of possible policy actions with respect to adverse action notices and also to electronic disclosure more generally.” It will evaluate the output of the Tech Sprint to help inform its evaluation of whether particular statements of policy, rulemaking, or other actions in these areas may be appropriate.
The CFPB expects to make participants’ demonstrations of proposed innovations publicly available and intends to issue of one or more reports that describe and analyze sprint proceedings. According to the CFPB, each sprint team will maintain control over any intellectual property it creates in the course of the Tech Sprint that it does not otherwise share with the public. We will keep an eye on what comes out of the October Tech Sprint- the CFPB has already announced another for March 2021 relating to consumer disclosures required under the Home Mortgage Disclosure Act and surely others addressing various topics of interest will follow.