Fintech
Regulators consider ‘further measures’ to regulate bank-FinTech deals
Three federal banking regulators said on Thursday (July 25) they are considering “additional measures” to ensure banks effectively manage risks associated with bank-FinTech deals.
The agencies stated this by publishing a joint statement on banks’ third-party deposit arrangements and issued a request for information on agreements between banks and FinTech.
THE Board of Governors of the Federal Reserve SystemTHE Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) announced the publication of the statement and the separate request in a joint statement Press release on Thursday.
The statement reminds banks of the potential risks associated with third-party arrangements to provide bank deposit products and services. While the agencies support responsible innovation, they identified several concerns about how the arrangements are handled.
“The statement describes potential risks and provides examples of effective risk management practices for these arrangements,” the agencies said in the release. “In addition, the statement reminds banks of existing legal requirements, guidance, and related resources and provides insights that the agencies have gained through their oversight.”
“The statement does not set new supervisory expectations,” they added.
The separate request for information published Friday covers a broad range of agreements between banks and FinTechs, including those related to deposits, payments, and lending products and services.
“The agencies are seeking input on the nature and implications of bank-FinTech arrangements and effective risk management practices,” they said in the release. “The agencies are considering whether additional measures could help ensure that banks effectively manage the risks associated with these various types of arrangements.”
PYMNTS Intelligence found that in 2021, about two-thirds of banks and credit unions had partnered with a FinTech in the previous three years, and that about nine in 10 banks considered FinTech partnerships at least somewhat important.
According to PYMNTS Intelligence, the momentum has shifted toward cooperation as both banks and FinTechs adapt to changing customer preferences, economic pressures and regulatory challenges. Hacksaw collaboration, “FinTech-Bank Relationship Moves Towards Collaboration.”
Addressing bank-FinTech relationships, Charlie YouakimSezzle CEO, said in the report: “Together, they are driving innovation, transforming financial services and creating a more seamless and personalized banking experience for customers.”
See more in: banking, BANKING REGULATION, Board of Governors of the Federal Reserve System, F.D.I.C., Federal Deposit Insurance Corporation, Federal Reserve, financial institutions, FinTech, News, OC&C, Office of the Comptroller of the Currency, partnership, PYMNTS News, regulations, What’s new