In what is a recurring feature, Finopotamus spotlights innovative women who are positively impacting technology applications in the credit union industry, and beyond.
For this issue, we visited with Alliance for Innovative Regulation’s CEO and Co-founder Jo Ann Barefoot. The Washington, D.C. –based global non-profit provides tools to counter dangers and optimize financial services for the digital age.
By W.B. King
Besides once spending four days and three nights on a mountain, solo, without a tent, fasting, Jo Ann Barefoot’s background also includes fly-fishing on five continents, escaping a charging brown bear in Alaska and working in leprosy villages in India. These experiences were surpassed when she beat both polio and cancer. And while technology literally saved her life, she didn’t officially enter the tech industry until roughly 10 years ago.
“I’ve worked mainly with regulatory efforts to expand financial inclusion and consumer protection,” said Barefoot, a former bank regulator and staff member at the U.S. Senate Banking Committee. “A decade ago, I began seeing fintech innovation emerge that could help solve many consumer problems that regulation has not been effective against.”
In a recent LinkedIn Live posting, Barefoot, with the sun-splintered United States Capitol in the background, stated that financial institutions should be paying close attention to what is occurring in the policy arena.
“A lot of the fintech sector emerged in a time when the policy issues were distant from them —the day to day,” she said. “That’s changing. There’s so much at stake for consumers in the months ahead — as we look at issues like privacy, cybersecurity, fairness of algorithms and shift in big tech. So, I urge everyone to stay tuned.”
Listen and Be Prepared
Before co-founding and assuming the role of CEO at Alliance for Innovative Regulation (AIR) in July 2019, Barefoot held a myriad of positions. Beginning her career in 1976, she spent two years serving as the staff appointee of the full committee chairman, William Proxmire, to the Subcommittee on Housing and Urban Affairs. There she worked on issues related to banking laws involving consumers and community reinvestment.
“I’ve had several amazing mentors. Given my age — I’m a baby boomer — they were mostly men. Several took a chance on me when I was very young, in an era when selecting women for leadership roles was rare and probably felt risky. They also mentored and modeled me on the secrets to success, which aren’t rocket science but are nevertheless not so common,” said Barefoot who earned degrees from Ohio Wesleyan University, University of Michigan and George Washington University.
“They taught me how to get people to listen to me by doing the basics — listening well, being prepared and thinking outside the little boxes that structure our work lives,” she added.
Barefoot would go on to hold other positions, including the first woman deputy Controller of the Currency where she addressed issues like fair lending laws for national banks. When she left government employ in 1982, she founded Barefoot Marrinan & Associates, which provided banking regulatory advice on consumer financial protection. Fourteen years later, she became the managing director at KPMG, a global management and technology firm where she focused on regulatory risk management practices. She would later go on to serve as a co-chair at Treliant Risk Advisors and as a senior fellow at the Harvard Kennedy School Mossavar-Rahmani Center for Business and Government, among other jobs.
“One thing I learned from mentors, more from implicit than explicit example, is the need to avoid silos, to cross-pollinate experience and ideas,” Barefoot said. “If you’re a lawyer, learn tech. If you’re a tech person, work with the arts. Those connections across boundary lines are the ignition points for creativity and new, bigger ideas.”
In 2020, Barefoot was inducted in to the Fintech Hall of Fame by CB Insights. The following year she was named Finovate’s Fintech Woman of the Year and also landed on Forbes 50 Over 50 list. The same year, AIR was honored in Fast Company’s Changing Ideas Awards.
“I’m thrilled by the recognition, but I know it’s not for me,” said Barefoot who is a National Foundation for Credit Counseling board member and a FinXTech advisory board member. “It’s for our team at AIR, a majority of whom are women.”
Talent Logjam
Describing today’s FI tech sector as a young disruptive industry, Barefoot said workforce demographics, especially in relation to women, are gradually diversifying.
“That progress is slow, but I do think it’s accelerating, mainly because many more people are seriously focusing on it. That focus is driven partly by external pressure, but also by a growing realization that diverse teams and diverse leadership clearly create better products when you’re selling to diverse markets,” she continued. “I see more women, but it is very slow growth.”
On a daily basis, Barefoot said she witnesses “awesome” women who are “over-represented one step down from the top jobs — what she called a “talent logjam.” Executives, she added, need to break those logs free.
“To women, my advice is to have courage. Be bold. Women should reach high. When they do, they’ll often get what they go after,” she said. “If I could convince women of one thing, it would be that most [of them] should probably take more risks.”
Like her mentors before her, Barefoot “actively” pays it forward to the talent coming up behind her. She especially enjoys counseling young women.
“I look for ways to open doors for them. I feature them in our events. We host a lot of conferences and roundtables. I try to give them credit. If I cite an idea I got from a woman, I try to say her name,” she said. “This year, we co-hosted a global TechSprint on Women’s Economic Empowerment. We had majority female teams compete, and nearly all the speakers, and all the judges, were women. It was a stunning success.”
Evolving Oversight
While noting that all innovation and tech in the financial services space grabs her attention, Barefoot said the most exciting frontier is the mainstreaming of cryptocurrency and the emergence of “mind-bending technology” and business concepts in blockchains, tokenization and defi (decentralized finance).
“Tokenization enables entirely new modes of ownership. The Economist had a great article this year on defi, using the example of a [fashion] model who, today, has her likeness owned by the photographer who takes her picture,” she said. “What if she could retain a tokenized share of ownership, so that if she later becomes a top model and those photos surge in value, she has retained a stake in what she helped create? The new possibilities are endless.”
And while she underscored related challenges, such as regulating decentralized autonomous organizations (DAOs) or a leaderless network of “people interacting through open source code,” Barefoot said a new form of oversight will evolve.
“I have a theory that it won’t be through traditional methods. It will be through computer code. Watch the financial regulatory space for some fascinating tech problems over the next few years,” she posited. “I hope lots of women will come help solve them, to create these new norms. Tech people, like most people, tend to think regulatory problems are boring, but believe me, they aren’t. They are interesting, and they are important to people’s lives.”
Transforming Financial Regulation
Noting that credit unions have many differences from other financial institutions, including membership structure, tax treatment and regulatory and deposit insurance structures, Barefoot said the credit union industry also doesn’t have behemoths in its midst like JP Morgan Chase or Bank of America. But what these FIs all have in common is a growing banking population seeking digital-first offerings.
“Credit unions have a lot in common with community banks, which most banks are, but banking is dominated by large institutions that have completely different geographic scopes, product offerings, and of course, technology,” she continued. “Most credit unions, like most small banks, will be struggling to keep up with the tech demands of digital age customers and the tech efficiencies of the digital age back office. Most of the small depository institutions will need to mobilize, fast, to compete with the tech advantages of large banks, fintechs, and the big tech firms increasingly offering financial services to their customers.”
While there are tech hurdles for some credit unions, Barefoot said AIR’s mission, in part, is to transform financial regulation from manual, analog design to digitally-native design. To this end, the organization has a number of forward-leaning initiatives, including helping small minority depository institutions digitize product offerings and operations; the co-partnered Crypto Climate Accord aimed at helping the crypto industry become carbon neutral; and a project with Google on Model Risk Management (MRM) for artificial intelligence used in finance.
“And that’s just a fraction of what we have going. All of it leads back to the need to bring modern digital data and AI into financial regulation, to create a financial sector that is resilient, largely crime-free, and works well for everyone — that’s affordable, accessible, and fair, and that produces widespread financial health,” said Barefoot.
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