This week, the American Fintech Council, an industry association representing fintech companies that deliver critical access to safe and affordable financial services, issued a statement supporting the Joint Agency Third Party Risk Management Guide for Community Banks, a document that helps community banks navigate fintech partnerships.
“Innovative banks and fintech companies have responsibly transformed the way families bank, lend, and transact,” American Fintech Council CEO Phil Goldfeder said. “They have levelled the playing field and created critical access to financial services for consumers and small businesses long forgotten by traditional institutions.”
Goldfeder credited the authors for improving many aspects of bank and fintech partnerships.
“The newly released Third Party Risk Management Guide for Community Banks provides useful clarity around bank-fintech partnerships,” he said. “It will help identify the risks, roles, and responsibilities to keep community banks competitive without compromising on consumer safety. This guide should help mitigate information asymmetries and provide clear expectations on the processes that banks should pursue as it relates to managing third-party relationship risks.”
The Third Party Risk Management Guide for Community Banks has its place, but all participants in the process must still fulfill their roles, Goldfeder cautioned.
“While this guide provides important clarity for banks and fintech companies, it is equally important that examiners ensure they are properly assessing the risks posed by bank-fintech partnerships,” he explained. “As we noted in our recent letter to the FDIC, we are still facing a crisis of significant mismatch between the fintech services used to conduct our daily lives and the regulatory mechanisms designed to support these innovations. Responsible innovators, in collaboration with pragmatic regulators, can help root out bad actors and ensure strong industry-wide compliance and responsible capital management.”
“This (Third Party Risk Management Guide for Community Banks) is an important step forward, but we urge federal regulators to increase engagement with state regulatory agencies and policymakers to streamline the current patchwork regulatory environment and ensure consistent examination and enforcement throughout our industry.”
