To counteract “regulation through enforcement,” ICBA urged federal banking regulators to periodically publish supervisory highlights on key examination findings related to bank-fintech partnerships, similar to the Consumer Financial Protection Bureau’s.
Details: ICBA’s comment letter followed an interagency request for information on the nature of bank-fintech arrangements, effective risk-management practices, and whether enhancements to existing supervisory guidance may be helpful. ICBA said it appreciated the agencies’ efforts to revisit the existing regulatory framework and that the current system has significant shortcomings.
Recommendations: In addition to regularly sharing supervisory highlights, ICBA said the agencies should:
Reinstitute frequently asked questions as an addendum to the guidance.
Explore the use of “just in time” reviews, enhanced examination of novel technologies, and supervised use of variables.
Utilize dormant authority provided under the Bank Service Company Act.
Use economies of scale to effectively map and monitor complex third-party relationships through the use of shared due diligence and standard-setting organizations.
Background: ICBA and other groups in August requested a 30-day extension to the comment period for the regulatory agencies’ RFI, citing the crucial role that bank-fintech partnerships play in the evolution of banking. On Sept. 13, the agencies extended the comment period until Oct. 30.
