In August 2021, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Board of Governors of the Federal Reserve System (the Federal Reserve and, collectively with the OCC and the FDIC, the Agencies) released a joint bulletin titled “Conducting Due Diligence on Financial Technology Companies: A Guide for Community Banks” (the Guide). The Guide is intended to be a resource for community banks assessing risks and performing due diligence when considering prospective relationships with fintech companies. In the introduction to the Guide, the Agencies note that, “[w]hile the [G]uide is written from a community bank perspective, the fundamental concepts may be useful for banks of varying size and for other types of third-party relationships.”
As described below, the Guide covers six main areas of due diligence: business experience and qualifications, financial condition, legal and regulatory compliance, risk management and control processes, information security, and operational resilience.
While the Guide recognizes that community banks may benefit from the expertise fintech companies may provide by delivering access to innovative technologies, it also signals that the Agencies intend to pay increased attention to risk management conducted by financial institutions partnering with fintech companies.