Three federal bank regulatory agencies said Thursday (July 25) that they are considering “additional steps” to ensure banks effectively manage risks associated with bank-FinTech arrangements. The agencies said this as they released a joint statement about banks’ third-party deposit arrangements and issued a request for information on bank-FinTech arrangements. The Board of Governors of the Federal Reserve System, […]
The post Bank Regulatory Agencies Considering ‘Additional Steps’ to Govern Bank-FinTech Arrangements appeared first on PYMNTS.com.
Three federal bank regulatory agencies said Thursday (July 25) that they are considering “additional steps” to ensure banks effectively manage risks associated with bank-FinTech arrangements.
The agencies said this as they released a joint statement about banks’ third-party deposit arrangements and issued a request for information on bank-FinTech arrangements.
The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC) announced their release of the statement and the separate request in a joint press release on Thursday.
The statement reminds banks of potential risks associated with third-party arrangements to deliver bank deposit products and services. While the agencies support responsible innovation, they have identified several concerns with how the arrangements are managed.
“The statement details the 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 relevant existing legal requirements, guidance and related resources, and provides insights that the agencies have gained through their supervision.”
“The statement does not establish new supervisory expectations,” they added.
The separate request for information issued Friday covers a broad range of bank-FinTech arrangements, including those having to do with 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 steps could help ensure banks effectively manage 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 out of 10 banks saw partnerships with FinTechs as at least somewhat important.
The dynamic has been swinging toward cooperation as both banks and FinTechs adjust to changing customer preferences, economic pressures and regulatory challenges, according to the PYMNTS Intelligence and Sezzle collaboration, “The FinTech-Bank Relationship Shifts Toward Collaboration.”
Addressing bank-FinTech relationships, Charlie Youakim, CEO of Sezzle, said in the report: “Together, they are driving innovation, transforming financial services and creating a more seamless and personalized banking experience for customers.”
The post Bank Regulatory Agencies Considering ‘Additional Steps’ to Govern Bank-FinTech Arrangements appeared first on PYMNTS.com.
