Armen Meyer: A Journey from Public Service to Fintech Leadership

Fintech is a rapidly growing space, one where innovation and regulation often collide.

And it is in this context that Armen Meyer stands out as a leader with balanced perspective. Co-founder of the American Fintech Council and a seasoned expert in both government and the private sector, Armen's journey demonstrates his dedication to shaping an equitable financial landscape.

Born to an Armenian mother, an immigrant, and grandparents who survived the Armenian genocide and thrived in the United States, Armen's family history is a poignant reminder of resilience. He credits this background for his professional choices, which have seamlessly woven together public service and high-flying corporate roles. His story starts with a commitment to public schools and leads to the prestigious halls of Harvard Law School, laying the groundwork for a career dedicated to fostering fair and competitive markets.

Armen's philosophy is rooted in finding synergy between consumer protection and market growth, particularly in the fintech industry. He argues that pro-consumer regulation often aligns with market interests. His insights led to pivotal decisions, such as LendingClub's transformation into a bank and the formation of the American Fintech Council, aimed at advancing regulations that benefit both markets and consumers. His op-ed in The American Banker, titled "Scale Back CFPB Rules? Let's be careful what we wish for," reflects this balanced approach.

A notable achievement in Armen's career is his work addressing market failures, particularly in the financial services sector. He highlights the issue of consumer comprehension in financial transactions as a critical area of focus. His efforts with the Responsible Business Lending Coalition to make loan terms more understandable for small business borrowers led to significant legislative successes in California and New York. These laws, he believes, not only aid small businesses but also create a fairer playing field where transparency is rewarded.

Armen's resume is a mosaic of influential roles: from leading public policy at LendingClub and advising diverse fintech entities to holding pivotal positions during the global financial crisis. Each role is a chapter in a career dedicated to navigating and shaping the complex interplay of regulation, market dynamics, and consumer protection.

Armen's influence extends beyond his immediate professional sphere, as seen in his involvement with various advisory roles, including the AI Education Project and the Berkeley SkyDeck. His commitment to innovation and regulation isn't confined to boardrooms or policy papers; it's about making a tangible impact on the ground.

Armen's educational background at Harvard Law School, with a focus on Antitrust, Law & Economics, provided a solid foundation for his understanding of the intricate balance between market forces and regulatory frameworks. This expertise has been crucial in his roles, whether as a campaign manager and communications director in various political campaigns or as a managing director at PwC, where he navigated the complexities of the Dodd-Frank Wall Street Reform Act.

In every position, from his early days in public service to his influential role in the fintech industry, Armen has demonstrated a unique ability to bridge divides. He balances a keen understanding of market dynamics with a deep commitment to consumer protection, always with an eye on how policy and business decisions impact the wider community. Whether it's advocating for clearer loan terms for small businesses or guiding startups through the regulatory maze, Armen's work is a powerful reminder of the impact even one individual can have in shaping an industry.

With your extensive background in both government and private sector roles, how do you balance the perspectives of consumer protection and market growth when advocating for regulatory changes in the fintech industry?

I think there is an overlap there that people don’t often realize. A lot of regulation that is pro-consumer is also pro-market, and vice versa. Take the regulation of artificial intelligence or machine learning in lending, for example. Sometimes people in the lending industry think they don’t want traditional rules such as anti-discrimination regulation to apply to complex underwriting algorithms. But without regulation you invite uncertainty and it’s hard to invest; you face enforcement actions, skeptical business partners and untrusing customers. It is often cheaper to embrace pro-consumer regulation early than to spend years avoiding them and eventually facing enforcement agencies. This is part of the reason I helped LendingClub buy and become a bank.

More recently, you see some crypto companies asking for regulations after having resisted them for years. They would have been better off doing so, before they got on their back foot with enforcement agencies, when they had an opportunity to shape architecture. I co-founded a coalition of companies called the American Fintech Council to work together on advancing regulations that are pro market and pro consumer. We prefer regulatory clarity in advance to enforcement actions and reputational risk.

Could you share an example of a specific market failure you've encountered in the financial services sector and how you approached addressing it through regulatory advocacy?

In my opinion, the mother of all market failures is when consumers don’t actually understand what they are buying. In these cases, the best product simply can’t win, and private sector incentive to invest is replaced with misincentive to be opaque.

A concrete example is my work with others in industry and with nonprofits to make loans more understandable for small business borrowers. We have successfully passed laws in California and New York to help make sure borrowers can understand the loans they receive, rather than risk being taken advantage of. We started a coalition of small business lenders called the Responsible Business Lending Coalition to pass these laws, advancing the idea that small businesses need clearer information to make smart financing decisions. Small businesses will of course benefit, but lenders benefit too because those with the best products can win rather than opacity getting rewarded. The California legislature very recently passed an extension of our small business transparency law, with a unanimous vote this time because of how successful it has been. [Here is Armen’s public statement on the topic with the RBLC.]

As Chief of Staff of New York's financial services regulator, you played a key role in managing the crisis's impact on the economy. What strategies or initiatives did you find most effective in stabilizing the financial sector and promoting economic recovery?

Here is another example of consistency between what’s good for the economy and what is good for consumers. If consumers understood the mortgage loans they were signing up for, the global financial crisis may not have had to happen. In New York, we passed laws and regulations clamping down on mortgage lenders' ability to mislead borrowers, and passed regulations on mortgage servicing so borrowers could get help when they needed it. Some of these initiatives made their way later into federal law and regulation, and very much helped stabilize the economy. It would have been a lot better if we had these consumer protections in the first place.

With your experience advising fintech startups, what common regulatory misconceptions do you often come across among new entrepreneurs, and how do you help them navigate these challenges?

A common misconception occurs with founders in less clearly regulated areas of financial services. A new entrepreneur often decides to build a business around a regulatory gap, but has no plan to fill the gap with sensible public policy.

This unfortunately has been proven again and again to be a flawed strategy. In many subsectors of fintech over the past five years, the regulations and enforcement agencies have eventually come, while many CEOs unfortunately kept their heads in the sand. A serious entrepreneur will want to close regulatory gaps as the business grows larger by educating regulators on what is the best for consumers. But the entrepreneur has to make his argument with hard data, not just rhetoric. If not, undesirable regulation will eventually come, either because the entrepreneur grew the company to ultimately attract regulatory attention, or because other entrants mimic the company but act unscrupulously toward consumers which brings scrutiny upon the whole industry. Smart entrepreneurs get on their front foot as their business grows, in order to be ahead of the curve and advance regulations that protect their customers.

Looking ahead, what do you see as the most pressing regulatory issues that the fintech industry will need to address in the coming years, and how do you plan to contribute to solutions for these challenges?

Besides artificial intelligence, the other big issue concerns the lifeblood of fintech, namely data. Currently, there is a big competition between federal agencies and state agencies to figure out how and what consumer data should flow. As a result, we have privacy regulations that differ throughout the 50 states, we have personal data bills that have been stalled in Congress, and we have at least three regulatory proposals out of the Consumer Financial Protection Bureau and Federal Trade Commission.

The big debate concerns to what extent companies can use data to lower the cost of credit and provide better products, versus consumers' right to control their information and prevent unwanted marketing. The debate is going to play out across multiple subsectors of fintech, from the traditional regulated credit bureaus, to new regulated entities dealing in customer data, to banks' obligation to share or restrict customer data they have, and to all sorts of other data holders from employee payroll providers to insurance companies. Customer data is everywhere and it can be used to make financial services a lot better or it can be abused. The decisions we make over the next three years are going to set a foundation that will have a lasting impact.

Armen, what's your one guiding principle in both life and work?

Be honest and treat people well. It is easy to get ahead in the short run by taking undue credit or misleading or mistreating others, but life is long. I'm not saying one will inevitably get caught or karma will eventually catch up, but later in life you won’t value the things that have come from what you’ve done wrong anywhere near as much as the things from what you've done right. Treat others well and build lasting relationships and friendships.  

Images courtesy of: Armen Meyer