Consumer Reports Will Give Financial Apps Same Scrutiny It Gives Appliances

Source: American Banker

Consumer Reports is preparing to test consumer finance apps with the same rigor it applies to its evaluations of washing machines and mattresses.

In September, the nonprofit announced that it had received a $1.5 million grant from Flourish Ventures, a venture capital firm that focuses on financial health innovations. The purpose of the grant is to strengthen the consumer organization’s assessments of digital finance services, from conducting surveys to testing products to advocating for protections based on its findings. Consumer Reports will look at fintech apps and other digital tools that let users spend, save, borrow or invest their money.

This project aims to help consumers navigate the digital finance marketplace, uncover potential harms in the industry and press policymakers and companies for solutions — the findings could have ripple effects on financial institutions and fintechs as well.

“If fintech is held to a higher standard as a result of this work, banks might have to respond accordingly, since they are direct competitors,” said Chuck Bell, advocacy program director for Consumer Reports. The research could inform how banks assess potential partnerships or acquisitions and lead to safer fintech services reaching bank customers, he added.