On January 29, 2018, the U.S. House of Representatives passed H.R. 1457, the Making Online Banking Initiation Legal and Easy (MOBILE) Act of 2017, in an overwhelming 397-8 vote. The bipartisan legislation, which provides opportunities for consumers to open bank accounts without having to visit a physical branch, was introduced by Representatives Scott Tipton (R-CO), Randy Hultgren (R-IL), Patrick McHenry (R-NC), David Scott (D-GA), Terri Sewell (D-AL), and Krysten Sinema (D-AZ).
Currently, banks face difficulty implementing verification processes for online and mobile banking accounts due to inconsistent state laws on swiping or copying state-issued identification cards. While most states permit mobile banking applications to copy licenses for verifying a customer’s identification, a small number do not and the House bill would preempt the conflicting state laws. The MOBILE Act would streamline the process for consumers wishing to open bank accounts electronically and ensure consumers are protected by the participating bank’s identity theft and financial fraud policies. The bill would permit financial institutions to use electronic copies of identification for purpose of identity verification. Specifically, the MOBILE Act would allow financial institutions, with an individual’s consent, to record personal information from a scan, copy or image of a driver’s license or other personal identification card. It would also allow the institution to store the information electronically when an individual initiates an online request to open an account or obtain a financial product. The financial institution would be permitted to use the information for the purpose of verifying the authenticity of the driver’s license or identification card, verifying the identity of the individual, or complying with legal requirements. The financial institution would be required to delete any copy or image of an individual’s driver’s license or personal identification card after use.
This legislation could help the “unbanked” and “underbanked” population in the U.S. access financial services from mobile devices. The Conference of State Bank Supervisors (CSBS) supports efforts by banks “to innovate in a safe and sound manner to reach unbanked and underbanked consumers, especially in remote areas where the MOBILE Act would have the greatest impact,” it said in a statement.
This bill is similar to a provision in a bipartisan Senate bill (S. 2155) designed to bring regulatory relief to community and regional banks. Given the overwhelming vote in favor of passage of this bill, coupled with the bipartisan nature of such support, we expect that such or similar legislation may face similar results in the Senate.
Given the overwhelming vote in favor of passage of this bill, coupled with the bipartisan nature of such support, we expect that this legislation will face similar results in the Senate.