Riding the Culture Clash Wave: How California is Looking to Balance Consumer Protection and Responsible, Emerging Fintech Products

Culture Clash, the California-based performance trio with a 90s sketch comedy television show of the same name, nailed a duality common for kids like me. As one of the few Latinos riding waves in Oxnard, my favorite skit involved a surf-off between three fish-out-of-water Chicanos and a rival crew of local beach bums. (Spoiler alert: The three Chicano outcasts won with absurd acrobatics.) Three decades later, the culture clash explored through the group’s hijinks still holds lessons for me.

As the commissioner of the California Department of Financial Protection and Innovation, the state’s banking and financial protection regulator, I am now responsible for navigating culture clashes of a different kind. I often find myself sitting around tables or video screens with other bank regulators and industry executives as the only person of color. This superficial difference, however, is less important than the different real-life experience I bring to the table.

Growing up, my mother picked strawberries for a living and cashed checks at the local grocery store, because that Spanish-language interaction made more sense to her than a trip to the bank. She was not alone. Those formative images — of a community of seasonal farm workers tendering strawberry-stained paychecks at a grocery store — give me an inextricable lens through which I view much of our work. It informs how I view access to capital by communities most in need, the costs and benefits of alternative financial products and even the thorny topic of diverse team building.

Georgetown law professor and author Chris Brummer notes that an “absence of African American financial regulators poses enormous challenges from the standpoint of participatory democracy, and economic inclusion.” In other words: Representation matters.

It’s why the department has launched its first-ever Black Employee Resource Group and why we have asked all state-chartered banks and credit unions to voluntarily provide information on board and employee diversity, as well as feedback about equity and inclusion efforts within their institutions.

Indeed, leveraging these diverse perspectives is more critical today as financial regulation and tech innovation orbit around each other at greater speed. That is why the department’s revamped mission is so meaningful to me. The California Consumer Financial Protection Law, which took effect on Jan. 1, 2021, allows the department to better protect consumers from unfair, unlawful, deceptive or abusive financial products and services, invest in greater consumer outreach and education efforts and invigorate responsible innovation in the industry. The new law reflects a collective vision with input from both consumer advocates and industry players.

And this highlights another culture clash. Many ask how we will balance consumer protection with responsible financial innovation. To me, the answer is simple: They are not mutually exclusive. Before becoming a regulator, I served as general counsel to a fintech company where I navigated opportunities and challenges posed by this new wave of financial products. We know that some business models willingly follow existing laws and regulations while others obfuscate and contort their way around it.

I believe effective regulation of these new products requires critical engagement, not ideological prejudgment. When more data is needed, we will seek it as we did in January when the department announced a series of agreements with wage-access companies offering payday-loan alternatives. This should not be viewed as some sort of “pass.” To the contrary, the department has now expressly committed to overseeing these new products and addressing problems that may arise. We will also continue to focus on enforcing the law in California, including the state’s 36 percent rate-cap bill. This is why the department recently launched an investigation into technology platforms offering high-cost loans through bank partnerships.

While some believe traditional consumer protection and technology are as irreconcilable as a Mexican American surfer or a chief financial regulator of color, I disagree. I believe the intersection between affordable credit and technology can exist on the same wavelength. And if we regulate according to our principles — protecting consumers while creating an environment that encourages responsible innovation and growth — we can shape the world we wish to see.


Manuel P. Alvarez is the commissioner of the California Department of Financial Protection and Innovation, a state regulatory agency charged with protecting consumers and regulating banks and other companies offering financial products and services. 

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