Welcome back to our special podcast series with Flourish Ventures, where we spotlight the people and ideas reshaping the U.S. financial system.

Today’s conversation is about a topic that quietly determines what can scale in fintech: regulation, and what it looks like when policy and innovation actually reinforce each other.

We’re joined by Adrienne Harris, former Superintendent of the New York State Department of Financial Services, who helped modernize one of the most influential regulators in the country while returning hundreds of millions in restitution to consumers. And Jo Ann Barefoot, CEO and co-founder of the Alliance for Innovative Regulation (AIR), who has spent her career helping regulators around the world build the capability, tooling, and mindset to supervise emerging technology responsibly.

We talk about what “innovating as a regulator” really means, why data and talent matter as much as rules, and what builders can do to engage regulators early, before the stakes get high.

Let’s jump in!

🎧 Episode Summary: How Forward-Thinking Policy Shapes the Future of Financial Innovation

[00:00 – 04:10] Behind the Scenes, Guardrails & Getting SetThe episode opens with quick pre-show coordination: confirming audience scope (mostly U.S., but global listeners), aiming for an edited ~35 minutes, and setting the editing “safety valves” (rephrases, cuts if needed, transcript review for approvals). You also get a glimpse of the real production flow, documents, permissions, and the practical realities of recording with high-profile public-sector guests.

[04:10 – 05:35] Series Setup & Guest Intros: Policy and Innovation Aren’t OppositesJulie and Kabir frame the theme: the best financial innovation increasingly depends on regulatory clarity, operational capacity, and trust. They introduce Adrienne A. Harris (former NYDFS Superintendent) and Jo Ann Barefoot (AIR CEO), positioning the episode as a “how it actually works” look at policy that enables innovation without sacrificing consumer protection.

[05:35 – 09:35] Adrienne’s DFS Playbook: Consumer Protection and a Better Business ClimateAdrienne shares the “two-track” modernization thesis: policy outcomes and operational capacity have to move together. Highlights span consumer impact (including major restitution returned to consumers) and agency transformation (funding, staffing scale, technology overhaul, faster exam-to-feedback loops). The underlying philosophy is explicit: protecting consumers and markets can be mutually reinforcing with a healthier business environment, if the regulator is data-driven, transparent, and consistently engaged with stakeholders.

[09:35 – 15:30] Why Jo Ann Built AIR: Regulators Weren’t Built for Rapid, Mold-Breaking ChangeJo Ann traces her path from traditional regulation to a realization that technology could solve consumer problems regulation alone could not, but only if regulation didn’t unintentionally choke off the good while missing the bad. She explains the core gap AIR targets:

• Regulators often lack tools and information to understand fast-moving technology.
• Many agencies still operate on outdated internal systems, which limits supervision quality and speed.
• Progress is real but uneven; the biggest shift is that far more regulators now recognize they must modernize.

[15:30 – 17:05] Regulatory Tech Sprints: A Practical On-Ramp to “Touch and Feel” InnovationJo Ann explains regulatory tech sprints (hackathon-like formats pioneered by innovation teams like the FCA’s) as a mechanism to get regulators and technologists solving real supervisory problems together. The “magic” is interdisciplinary proximity, regulators, builders, domain experts, and advocates collaborating on concrete problem statements (from AML to modern regulatory reporting).

[17:05 – 21:20] Talent, Credibility, and Why “Mission” Actually RecruitsAdrienne builds on the sprint idea with a broader point: innovation requires diverse talent inside the regulator, technologists, private-sector operators, and specialists who understand new systems. She describes building a large crypto-focused unit and the internal flywheel: as a regulator executes real modernization, it becomes easier to recruit the next wave of talent. Jo Ann adds a direct appeal to technologists: the regulatory domain is full of hard, high-impact problems (fraud, scams, financial crime) that many engineers would rather solve than marginal ad-optimization.

[21:20 – 24:30] What Good Regulator Engagement Looks Like for BuildersJulie shifts the lens to founders: many still treat regulation as something to route around. Adrienne argues this is strategically shortsighted, regulatory approval can become a credibility signal that accelerates distribution with investors, partners, and customers. Her model of “good engagement” is:

• Early, frequent, transparent communication
• Relationship-building before approvals or emergencies
• Sharing plans and risks, not just polished narrativesShe notes the proactive posture varies less by industry than by company culture.

[24:30 – 30:55] Safety-by-Design + Using the Full Menu of Regulatory ToolsJo Ann frames innovation as having an arc: early-stage tech may be lightly regulated at first, but in finance, meaningful scale inevitably intersects with regulators. Her recommendation is safety-by-design (and privacy-by-design): anticipate misuse cases, data abuse, and second-order effects before regulators force the issue.Adrienne then explains DFS’s approach to avoiding “regulation by enforcement” as the default. Instead: rulemaking when appropriate, guidance/FAQs when speed matters, and structured feedback loops. A concrete example is DFS’s AI-related guidance approach, soliciting comments, stress-testing feasibility, and publishing acceptable methodologies when industry feedback revealed practical constraints.

[30:55 – 41:05] What Regulators Still Need: Cloud, Data, Hiring Pathways, and Procurement That Isn’t GlacialThe conversation turns into a candid diagnostics session on why modernization is hard:

• regulators need more timely and higher-quality data (quarterly reporting doesn’t match today’s risk velocity)
• hiring pipelines for non-traditional talent are often structurally broken
• procurement cycles can be so slow that tools arrive obsoleteJo Ann shares a vivid hiring anecdote (a “dream candidate” blocked by screening), and both guests emphasize the “digging out to get back to zero” reality, retiring legacy systems before you can even talk about AI supervision. The point is not just tools; it’s institutional agility.

[41:05 – 45:48] Culture of Innovation: Psychological Safety, Incentives, and ROI NarrativesJo Ann asks directly about the “secret” to building an innovation culture inside a regulator. Adrienne describes two layers:

• Internal culture: encouraging staff to bring ideas and solutions without penalty
• External culture: regulators get blamed when things go wrong but rarely get credit when they go right, reinforcing risk aversion

She also underscores the importance of building ROI cases that resonate with legislatures and stakeholders (time saved, faster processing, more consumer impact), which helped justify investment in DFS modernization.

[45:48 – 50:45] Rapid Fire + ClosingThe episode closes with a lighter round (dream dinner guests, personal highlights), then a reflection that these policy-and-capability conversations don’t happen publicly enough, and that’s exactly why the series exists.