Alan Jernigan Testimony in Oklahoma: ALEC Ideas for the Changing Financial Services Landscape

ALEC Commerce, Insurance and Economic Development Task Force Director Alan Jernigan testified before the Oklahoma Senate Business and Insurance Committee focusing on the research and policy solutions ALEC offers in regard to the interim study, “Banking Deserts and Access to Financial Services in Oklahoma.”

You can read his testimony below.

Chairman Coleman, Vice Chair Alvord, Senator Daniels, and Members of the Committee:

I am Alan Jernigan, Director of the Commerce, Insurance, and Economic Development Task Force at the American Legislative Exchange Council (ALEC). I appreciate the opportunity to speak with you today and share ALEC’s nonpartisan research and analysis on the changing financial services landscape.

ALEC is the largest nonpartisan, voluntary membership organization headquartered in Virginia, made up of state legislators from across the country. Our mission is to promote the principles of limited government, free markets, and federalism—core values that strengthen both states and their citizens. In support of your state’s efforts, I’ll be highlighting several key ALEC model policies developed by ALEC’s Commerce, Insurance and Economic Development (CIED) Task Force. These models can help Oklahoma build a forward-looking and resilient foundation for financial services access.

The ALEC CIED Task Force is comprised of state legislators and policy experts who believe that financial services is an area of policy that affects most Americans every day. Members believe that in many instances, over-regulation of a financial tool lessens its availability and ultimately harms the consumers the regulation was intended to protect. For that reason, members of the Task Force work on model policies that allow free markets to flourish while protecting consumers.

Before discussing specific policies, I want to start with how Americans bank today, as that picture has changed dramatically over the last few years.

According to the FDIC, about 96% of U.S. households had a bank or credit union account in 2023. Roughly 6.2% of Oklahoma households were unbanked, compared to just 4.2% nationally. Additionally, another 14% of American households are underbanked, and about one in six have no access to mainstream credit at all.

At the same time, the way people access their money has changed. Nearly half of banked households now use mobile banking as the primary mechanism to access their accounts. That figure has increased by approximately 900% over the past decade, while the use of bank tellers has decreased by more than 50 percent.

What this tells us is that a banking desert is no longer only about the proximity of the nearest institution. Rather, access increasingly depends on whether a consumer can open an account on a phone, use a payment app, and obtain a line of credit. The question for lawmakers is whether state law helps providers and products reach underserved Oklahomans or if it stands in their way.

One of the leading examples of this changing landscape is digital assets. Cryptocurrency allows anyone in the world with an internet connection to store and exchange value, and it can be used for transactions at retailers such as Home Depot and Whole Foods. Cryptocurrency is here to stay, and it has left federal and state governments to determine the best practices as the landscape continues to evolve.

As with any emerging technology, there are concerns about individuals and groups that look to capitalize on these new developments for their own nefarious purposes. Many existing laws and enforcement measures already provide sound protection, but it is key for states to lead on this constantly changing landscape without stifling innovation.

As policymakers respond, it is important to distinguish between two problems that are often grouped together: fraud and scams. In a payments sense, fraud is an unauthorized transaction. Examples include when a criminal steals a card number or takes over an account without the owner’s knowledge. Federal law already addresses this, and financial institutions bear that loss. The FTC reports that they received 3 million reports of fraud totaling $15.9 billion in losses in 2025.

A scam is different. The individual is deceived into authorizing the payment themselves, often by someone impersonating a bank, a government agency, or a loved one, as opposed to the payment being sent without their permission. Since the payment is authorized by the account holder, the same liability rules do not apply. According to the FTC, consumers lost over $11 billion to scams in 2025.

Last year, Texas aimed to combat these problems by modernizing its Financial Crimes Intelligence Center (FCIC). The FCIC is a statewide coordination center that connects law enforcement with industry partners to share information and streamline investigations. It treats fraud as organized crime rather than isolated incidents.

States can protect their businesses and consumers by increasing coordination to identify threats earlier and respond faster.

A related issue on the topic of digital assets is the concept of a central bank digital currency, or CBDC. A CBDC is not the same as other cryptocurrencies, which are decentralized and not issued by the government. A CBDC would be a purely digital form of money issued and controlled by the Federal Reserve, giving the government unprecedented insight into and control over the finances of Americans. President Trump directed federal agencies to terminate CBDC initiatives, and Congress prohibited the Federal Reserve from creating or issuing a CBDC through 2030 as a part of the 21^st Century ROAD to Housing Act. To protect future generations beyond the expiration, the ALEC Reject CBDCs and Protect Financial Privacy Act, one of the ALEC Essential Policy Solutions for 2026, opposes the development of a CBDC and provides that state agencies will not accept or require CBDC payments. It protects financial privacy and the competition that exists among private banks today, rather than placing it into the hands of a single institution.

The next policy I would like to discuss is the regulatory sandbox. Innovation creates brand new technologies, and many of them fall into heavily regulated fields like financial services. The ALEC Universal Regulatory Sandbox Act, also one of the ALEC Essential Policy Solutions for 2026, establishes a framework for innovators, under the observation of regulators, to launch and trial innovative products, services, and business models while temporarily bypassing laws or regulations that may conflict with the technology. Participants must disclose to consumers that a product is being tested, and regulators can end a test that puts the public at risk. This reform makes it easier for innovators and entrepreneurs to test products more quickly than current regulations allow, while protecting public health and safety.

These programs have already seen success across the country. Arizona created the nation’s first fintech sandbox in 2018. In 2020, Hawaii created its Digital Currency Innovation Lab to explore regulations and economic opportunities created by cryptocurrency, and its findings produced recommendations to make Hawaii a more attractive destination for businesses, including a more streamlined process for cryptocurrency transactions. Last year, Kansas became the fifth state with a universal sandbox program when the legislature overrode a veto of HB 2291. Several other states have created industry-specific sandboxes to promote innovation. The federal government is following the states’ lead, as Senator Ted Cruz has introduced the SANDBOX Act to create a federal program.

As technology increases opportunity and availability, these programs can ensure innovations have a chance to succeed and benefit the public without being hampered by regulations that were never meant to guide them. Oklahoma is no stranger to this concept, as the state has considered sandbox legislation before. Many of the products that can reach Oklahomans in banking deserts and are exactly the types of innovations that do not fit neatly into regulatory environments written decades ago.

The final model I will highlight recognizes that free markets, not government mandates, protect and create access to credit and financial services. Last December, ALEC members unanimously adopted the ALEC Resolution Opposing Government Price Controls and Supporting Free Market Principles.

This resolution strongly supports free-market principles by opposing government-imposed price controls, particularly interest rate caps on credit products. These controls disrupt market dynamics by distorting how credit is priced and allocated and limit consumer access to credit, especially for those with non-prime credit. As a result, millions of consumers could face reduced access to credit or be shut out entirely, prompting them to turn to more expensive, less regulated alternatives. Free-market credit policies should be driven by voluntary agreements between informed parties, not restricted by government mandates that stifle innovation, competition, and access.

This resolution gives states a voice and urges Congress and federal regulators to reject uniform or arbitrary caps on credit products, and it encourages financial innovation, competition, and private-sector solutions to expand access to responsible credit.

When government sets an arbitrary ceiling, lenders do not simply accept lower returns. They stop lending to the borrowers who carry the most risk and often need it the most.

Proposals have been considered at the federal level to cap credit card interest rates at 10 percent. Credit unions, which already operate under an 18% federal ceiling on most loans, have warned that such a cap would restrict access to credit for individuals such as military families, veterans, and lower-income borrowers. According to the Electronic Payments Coalition, 82 to 88%of credit card accounts could lose access to credit under this proposal.

One in six American households already lacks access to mainstream credit, and a rate cap would increase this number. Consumers who cannot obtain mainstream credit do not stop needing it; rather, they turn to costlier, less regulated, and less transparent alternatives. A policy sold as consumer protection would lessen access for the very individuals that it aims to protect.

The financial services landscape will continue to change, and Oklahoma is well positioned to lead. By embracing innovation through ideas like a regulatory sandbox, protecting financial privacy, targeting criminals through coordination, and keeping mandates out of free markets, Oklahoma can expand access for the families and communities that need it most. By following the principles of limited government, free markets, and federalism, Oklahoma can serve as a nationwide example of sound financial services policy. Thank you for the opportunity to speak today, and I look forward to answering your questions.