Action Items

If your bank wishes to partner with a FinTech, consider the following

  • Are you up to date on all of the recent regulatory developments related to FinTech activities?
  • Have you performed adequate due diligence on the FinTech?
  • Have you had potential agreements with FinTechs critically reviewed in light of the new guidelines?
  • We are available to discuss any questions you may have as you consider FinTech partnerships.

Conducting Business with Banks: A Guide for FinTechs & Third Parties

On February 24, 2020, the FDIC published a new guide as part of its FDiTech series titled Conducting Business with Banks: A Guide for FinTechs and Third Parties. A link to the guide can be found here: https://www.fdic.gov/fditech/guide.pdf

The guide discusses third party risk management with a focus on new technologies and partnering with FinTech entities. The principles in the guide are applicable to whether the bank is using a FinTech as a vendor or if a bank is providing a service to a FinTech, such as Banking-as-a-Service ("BaaS").

The principles in the guide are consistent with prior Barack Ferrazzano Client Alerts:

The FDIC’s advice is also consistent with prior OCC remarks discussing financial technologies and banks offering new products, a link to which can be found here: https://www.occ.treas.gov/news-issuances/news-releases/2017/nr-occ-2017-125.html

Although the FDIC is attempting to provide guidance to banks working with FinTechs, they are doing so within the existing framework of risk management and vendor management principles. Specifically, the main takeaway from these new guidelines is the FDIC expects banks to apply careful due diligence and critical contract review when considering FinTech contracts. Even if your bank is not regulated by the FDIC, the principles embodied in the guidelines provide an outline of the critical issues to consider when working with a FinTech.

We Can Help You

Barack Ferrazzano Financial Institutions Group attorneys are currently working on a wide range of partnerships, contracts, and related agreements between banks and FinTechs. Please contact us if you are interested in discussing any potential FinTech partnership or vendor opportunities.

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