Board of Governors of the Federal Reserve System

While I support the request for information on bank-fintech arrangements (RFI), I am concerned that the agencies continue to publish piecemeal guidance and other documents based on an incomplete understanding of current bank-fintech relationships. This disjointed approach continues to provide insufficient clarity to firms regarding the agencies' supervisory expectations for third-party risk management, particularly when it comes to the wide range of bank-fintech relationships. We have seen that these relationships can pose significant risks to banks and their customers, including retail deposit customers who reasonably expect that their deposits will be insured and that their banking services provider will comply with all applicable laws, including consumer protection laws.

The RFI describes some of the known contours of certain bank-fintech relationships, identifies areas of potential risks that accompany these relationships, and asks a series of questions to gather information from the public about these relationships. I continue to support bank regulatory actions that prioritize responsible innovation within the regulated banking system that is consistent with safe and sound banking practices and consumer protection.¹ Today's RFI addresses one of the necessary elements for fostering innovation in the banking system: an effort to understand innovation, including its benefits and accompanying risks.

The RFI demonstrates an openness to expanding the agencies' understanding of bank-fintech arrangements. It is important for the agencies to fully understand the range of practices and different bank-fintech arrangements in the industry before issuing further guidance. I encourage the public to provide information on these relationships to help inform our understanding of these arrangements.

While I am supporting the RFI, my support should not be construed as future support for any potential guidance or rulemaking that could result from this RFI. I remain concerned about both the risk of pushing out innovation from the regulated banking system and the sheer volume of new guidance and rules for banks of all sizes. And concurrent with the RFI, the agencies are publishing a statement that contains significant and material overlaps with the RFI, focusing on deposit-based bank-fintech relationships. While much of the content of this statement could be constructive, I am concerned about the timing of releasing the statement concurrently with the RFI. There is a real risk that public feedback from the RFI will provide detail on previously unknown or less understood bank-fintech relationships, and associated risks or concerns, that would require further changes to the content of the statement.

While we understand that bank-fintech relationships include risks, including risks to retail customers, they present important opportunities that enable banks to remain competitive and provide enhanced services. It is important that banks who engage in these relationships understand their legal obligations, including with respect to consumer compliance. My hope is that this RFI and the process that follows will not lead to duplicative or contradictory guidance, or unnecessarily restrict innovation in the banking system. In addition, any future efforts should be coordinated with state banking regulators.

1. Michelle W. Bowman, "Innovation in the Financial System" (speech at the Salzburg Global Seminar on Financial Technology Innovation, Social Impact, and Regulation, Salzburg, Austria, June 17, 2024). Return to text