On August 27, 2021, the Federal Reserve, FDIC, and OCC released a 20-page guide intended to help community banks assess risks when considering relationships with financial technology (fintech) companies.
Community banks are entering into business arrangements with fintech companies to offer enhanced products and services to their customers, increase efficiency, and reduce internal costs. The guide is intended to serve as a resource for community banks when performing due diligence on prospective relationships with fintech companies.
The guide covers six key areas of due diligence that community banks can consider when exploring arrangements with fintech companies: business experience and qualifications, financial condition, legal and regulatory compliance, risk management and control processes, information security, and operational resilience. The guide also highlights practical sources of information that may be useful when evaluating fintech companies.