Bank Partnerships with Fintech Companies

Summary

This practice note outlines the banking regulations applicable to the Bank-Fintech partnership model, as well as the regulatory considerations and implications emerging from this new business model. Financial technology, or fintech, refers to the broad subset of financial innovations that apply new technologies to a financial service or product. For the past decade or so, Fintech firms have been offering a variety of financial services products to retail customers. The banking regulators—the Federal Reserve, FDIC, OCC, and NCUA—face particular fintech-related challenges regarding how to ensure banks and credit unions can efficiently and safely interact with nonbank fintech companies. Sometimes fintech companies partner with, and offer services to, banks or credit unions. Other times, they seek to compete with banks by offering bank or bank-like services directly to customers. In some circumstances, banks themselves can develop their own fintech.