Industry-Wide (All Banks)
In July 2021, the OCC, FDIC, and Federal Reserve published proposed interagency guidance on third-party relationship risk management, directly applicable to bank-fintech partnerships. The guidance outlined enhanced due diligence expectations in six areas: business experience, financial condition, information security, legal and regulatory compliance, operational resilience, and risk management. This was a significant step toward harmonizing supervisory expectations across the three federal banking agencies for how banks manage fintech and other third-party relationships. The proposal invited public comment and signaled increased regulatory scrutiny of the BaaS and embedded finance ecosystem.
Verified from source: The Federal Reserve, FDIC, and OCC jointly published proposed interagency guidance on third-party relationships risk management (86 FR 38182, Document Number 2021-15308), dated 07/19/2021, addressing risk management practices for banks engaging in third-party relationships.
- Established a unified federal framework for how banks should evaluate and oversee fintech partners
- Raised the compliance bar for sponsor banks in BaaS arrangements across due diligence, contracting, and ongoing monitoring
- Signaled that regulators view bank-fintech partnerships as a systemic supervisory priority