of loan tracked by the new york fed ’ s quarterly household debt report. ” ) ; jesse bricker, lisa j. dettling, alice henriques, joanne w. hsu, lindsay jacobs, kevin b. moore, sarah pack, john sabelhaus, jeffrey thompson, and richard a. windle, “ changes in u. s. family finances from 2013 to 2016 : evidence from the survey of consumer finances ( pdf ), " federal reserve bulletin vol. 103, no. 3 ( september 2017 ). 13 federal reserve bank of new york, quarterly report on household debt and credit ( pdf ), august 2017. ( “... [ d ] elinquency rates for student loans are likely to understate effective delinquency rates because about half of these loans are currently in deferment, in grace periods or in forbearance and therefore temporarily not in the repayment cycle. this implies that among loans in the repayment cycle delinquency rates are roughly twice as high. ” id. n. 2 ). 14 this can be particularly challenging for older consumers. see, e. g., aarp, “ financial innovation frontiers ( pdf ), ” april 2017. ( “ 50 + consumers face unprecedented financial complexity. ” ) 15 board of governors of the federal reserve system, report on the economic well - being of u. s. households in 2016 ( pdf ) ( washington : board of governors, may 2017 ). 16 id. 17 see, e. g., krista tippett, on being, radio interview with daniel kahneman, october 5, 2017. ( “... is actually completely not possible for a finite human mind to be rational or to obey the axioms of rationality. you ’ d have to know too much... [ t ] he cognitive rules are, to a large extent, simplifying rules. they are shortcuts. ” ) 18 see, e. g., david laibson, andrea repetto, and jeremy tobacman, “ estimating discount functions with consumption choices over the lifecycle ( pdf ), ” national bureau of economic research working paper 13314 ( cambridge, mass. : nber, august 2007 ). 19 see, e. g., john beshears, james j. choi, david laibson, and bridgitt c. madrian, “ simplification and saving ( pdf ),

lael brainard : where do consumers fit in the fintech stack? speech by ms lael brainard, member of the board of governors of the federal reserve system, at " fintech risks and opportunities : an interdisciplinary approach ", a conference sponsored by the university of michigan, ann arbor, michigan, 16 november 2017. * * * the new generation of fintech tools offers the potential to help consumers manage their increasingly complicated financial lives, but also poses risks that will need to be managed as the marketplace matures. 1 in many ways, the new generation of fintech tools can be seen as the financial equivalent of an autopilot. the powerful new fintech tools represent the convergence of numerous advances in research and technology — ranging from new insights into consumer decisionmaking to a revolution in available data, cloud computing, and artificial intelligence ( ai ). they operate by guiding consumers through complex decisions by offering new ways of looking at a consumer ’ s overall financial picture or simplifying choices, for example with behavioral nudges. as consumers start to rely on financial autopilots, however, it is important that they remain in the driver ’ s seat and have a good handle on what is happening under the hood. consumers need to know and decide who they are contracting with, what data of theirs is being used by whom and for what purpose, how to revoke data access and delete stored data, and how to seek relief if things go wrong. in short, consumers should remain in control of the data they provide. in addition, consumers should receive clear disclosure of the factors that are reflected in the recommendations they receive. if these issues can be appropriately addressed, the new fintech capabilities have enormous potential to deliver analytically grounded financial services and simplified choices, tailored to the consumers ’ needs and preferences, and accessible via their smartphones. 2 consumers face complex financial choices when the first major “ credit card, ” the diner ’ s club card, was introduced in 1949, consumers could only use the cardboard card at restaurants and, importantly, only if they paid the entire amount due each month. 3 today, the average cardholder has about four credit cards, and the federal reserve bank of new york estimates that american consumers collectively carry $ 785 billion in credit card debt. 4 when signing up for a credit card, consumers face a bewildering array of choices. half of consumers report that they select new cards based on reward programs, weighing “ cash back ” offers against