Klaros Group, an advisory and investment firm focused on assisting fintech clients with compliance and regulatory requirements, is adding a fresh industry veteran to its team. Tracy Basinger, former head of supervision at the Federal Reserve Bank of San Francisco is reentering the financial services spaces joining Klaros as a senior advisor.
Starting off as commissioned examiner, Basinger held a number of roles over her 30+ years at the Fed, – her most recent position having served as the head of bank supervision from 2017 to 2021 and leading a 350-person team that conducted consumer protection supervision across community, regional, foreign and complex organizations.
In 2015, Basinger started a fintech practice within the bank that would allow her to eventually represent the fintech task force. Towards the end of her tenure, she began sponsoring a system-wide initiative that examined how supervision could be run differently given how often technology is changing.
In an interview with Basinger and Konrad Alt, partner and co-founder of Klaros, Basinger explained to FinLedger while there are a lot of opportunities for fintech to solve the intractable problems like access and inclusion and trust, it can also do just the opposite.
“I’ve witnessed it firsthand. I saw it not properly overseen, and there is opportunity there to figure out how to strike the right balance so that people don’t run fast and just break things in a way that hurts consumers, but still allows them to run fast,” Basinger said.
However, a lot has changed since Basinger stepped into her fed role, and the industry ruling regulation has had to learn to keep up.
“When we first got engaged, it was basically the banks were the competitors and we were going to democratize financial services and there would be no need for banks to exist as they do today. But now, at some point, most partner with banks if they’re the direct customer interface, and then you’ve got the whole middle layer that’s designed to connect banks and fintechs and help that process easier,” Basinger said. “Realizing that change in consumer preferences, we now see how necessary it is they work together.”
As for the next step in her financial services career, Basinger will be in good company. Klaros was co-founded just two years ago by Konrad and Michele Alt, Brian Graham and Adam Shapiro and now boasts a team of partners and principals assisting in compliance.
Previously, Konrad had served 12 years as chief operating officer and managing director of the IBM company, Promontory Financial Group. He was also the senior deputy comptroller for nearly four years in the Office of the Comptroller of Currency. That put him as the second-ranking executive in the federal agency responsible for overseeing the U.S. national banking system.
Michele tenured 22 years in the OCC in a number of attorney positions before rising the ranks to become assistant director, legislative and regulatory activities and eventually district counsel. Most recently, Michele also held a director role at Promontory mentoring financial services clients on strategic advisory matters (including bank charter applications), risk management, regulatory compliance and policy advocacy.
Shapiro spent a number of years working alongside Alt at Promontory in a number of director level roles before serving as the Global Head of Strategy – Open Platform at BBVA.
“The intersection of finance, technology and regulation is incredibly interesting and complex. We are building a group that deeply understands each of these domains,” Alt said. “We see a large and growing need for that combination of expertise in the market, both domestically and internationally.”
According to Alt, the group’s clients typically consist of late stage fintechs looking to be more involved in the banking system – whether that be receiving their banking licenses or just working with a variety of banking partners. With late stage fintechs, Alt explained when the scale of the company outgrows the bank the fintech originally partnered with, the question of does this smaller bank understand the regulatory issues the fintech is facing becomes Klaros’ bread and butter.
“With that in mind, it was a no-brainer to bring Tracy on,” Alt said. “With her skills and experience she is going to be such an important player on out team as we look to understand the gaps and standards these growing fintechs will witness.”