The Federal Deposit Insurance coverage Corp. (FDIC) is in search of public enter on doubtlessly establishing a standards-setting group that might devise finest practices for fintechs and different tech firms that need to work with banks, the regulator mentioned this week in a launch.
The regulator is also contemplating instituting a voluntary certification program to evaluate the tech companions’ compliance with requirements, assist standardize due diligence practices and cut back related prices.
The transfer may profit group banks, which — in comparison with bigger establishments — have smaller budgets and fewer personnel to commit to technological innovation.
Launched as a part of the FDiTech initiative, the request for data goals to “cut back the regulatory and operational uncertainty” that may maintain banks from becoming a member of forces with innovators.
That is the identical philosophy behind one other regulator’s effort to advertise innovation. The Shopper Monetary Safety Bureau (CFPB) issued a no-action letter in 2017 to on-line lender Upstart that lets the bureau observe the corporate’s different credit score knowledge model whereas shielding the startup from enforcement motion.
“Fostering innovation within the monetary sector is a high precedence for the FDIC,” Chairman Jelena McWilliams mentioned in a press launch Monday. “We now have to take away pointless regulatory impediments that banks should overcome when creating or deploying new applied sciences.”
Underneath the thought the FDIC is floating, a tech firm might apply for one certification that might be accepted at numerous banks, somewhat than spending time and sources chasing particular person agreements.
However the initiative might assist flatten the innovation curve for group banks, the place, McWilliams mentioned in October, “the associated fee to innovate is in lots of instances prohibitively excessive.”
“They usually lack the experience, the knowledge expertise, and analysis and growth budgets to independently develop and deploy their very own expertise,” McWilliams mentioned of group banks. “That’s the reason partnering with a fintech that has already developed, examined, and rolled out new expertise is usually a essential mechanism for a group.”
The FDIC is accepting feedback for 60 days from publication within the Federal Register.