FDIC Issues Consent Order to Cross River Bank Over Fintech Oversight Failures

On May 18, 2023, the FDIC entered into a consent order with Cross River Bank, one of the most prominent sponsor banks in the Banking-as-a-Service ecosystem. The regulator cited the bank for insufficient oversight of its fintech partnerships, failures in fair lending compliance, and unsafe or unsound banking practices. Cross River Bank is among a small group of sponsor banks — alongside Continental, Celtic, and WebBank — that serve as the banking infrastructure behind numerous fintech products.

The consent order requires the bank to remediate its compliance and risk management programs related to its fintech partner oversight. No specific financial penalties were publicly disclosed. The action signaled intensifying regulatory pressure on the BaaS model and raised questions about the sustainability of rapid fintech-bank partnership growth.

Industry observers noted this could make it even harder for fintechs to secure sponsor bank relationships, with some banks approving only 2-6 new fintech partners per year. The order became a landmark moment in the evolving regulatory landscape for embedded finance.