US Banking Agencies Issue Joint RFI on Bank-Fintech and BaaS Arrangements
On July 25, 2024, the OCC, FDIC, and Federal Reserve issued a joint statement and formal Request for Information examining Banking-as-a-Service arrangements and bank-fintech partnerships. The RFI explicitly highlights the role of intermediate platform providers — commonly known as middleware or aggregation layers — that sit between banks and fintechs, providing technology, compliance, risk management, payments, ledgering, and API-based data transfers. Regulators expressed concern that these complex, multi-layered supply chains amplify operational, compliance, and counterparty risks for banks, citing issues such as the Synapse middleware bankruptcy as evidence of reconciliation and consumer protection failures.
The agencies stated they support 'responsible innovation' but signaled that granular evaluations and potential new rules may follow. The RFI seeks public input on how middleware influences banks' handling of fintech risks, what effective practices exist, and how supervisory guidance should be enhanced. Comments were due approximately 60 days after formal publication in the Federal Register on July 31, 2024.
The action represents the most comprehensive federal regulatory engagement with the BaaS ecosystem to date and could reshape how banks, fintechs, and middleware providers structure partnerships.
- Signals potential new federal supervisory rules for BaaS middleware and intermediate platform providers, raising compliance costs across the ecosystem
- May accelerate bank preference for direct, bank-controlled embedded finance platforms over third-party middleware, reshaping BaaS market structure
- Could slow fintech-bank partnership formation in the near term as banks await regulatory clarity on acceptable arrangement structures