US Regulators Intensify Scrutiny of Bank-Fintech Partnerships in October 2024

Throughout October 2024, US federal banking regulators intensified their focus on the risks posed by bank-fintech partnerships, collecting comment letters and issuing guidance. Multiple organizations, including the Woodstock Institute and Mercury Technologies, submitted comments to the OCC, FDIC, and Federal Reserve addressing supervision of banking-as-a-service arrangements, deposit-taking risks, and regulatory authority over fintech partners. Federal Reserve Governor Michelle Bowman publicly argued that credit unions and fintechs should face the same regulatory standards as banks, highlighting concerns about an uneven playing field.

The FDIC continued issuing consent orders requiring certain partner banks to offboard fintech relationships, reflecting growing enforcement action in the BaaS space. Industry groups such as the Bank Policy Institute noted that compliance demands were placing increasing resource burdens on banks engaged in fintech partnerships. No new fintech bank charters were approved during this period, as regulatory activity centered on tightening oversight of existing arrangements rather than enabling new ones.

These developments signal a pivotal moment for the BaaS industry as regulators move toward more formalized supervisory frameworks for bank-fintech relationships.