Last week we covered what the Federal Reserve, OCC, and FDIC's latest guidance on third-party relationship management means for US banks. The guidance has also been highly-anticipated by fintechs, who will need to step up to meet updated requirements across all of their bank partners.

Here we dive into how fintechs should position themselves in response, with insights from leaders on what the guidance means specifically for fintechs in areas like open banking, lending, and Banking-as-a-Service. It's also worth calling out which issues are not addressed by the new guidance, and where to look for answers on some of the biggest questions on fintech regulation that are still left open.

Finally, we'll summarize the takeaways for banks and their fintech partners going forward.

Have insights/questions about the new guidance? We'd love your thoughts! Join the discussion in TWIF's Slack community: 🧵 Thread in #compliance_and_regulation.

What the guidance means for fintechs

The high-level takeaway for fintechs is that baseline diligence requirements are likely to heighten– per Andreas Westgaard, Director at Klaros Group, an advisory and investment firm focused on the future of financial services:

On the fintech side, I would expect a higher bar moving forward from their current or prospective bank partners - particularly in the areas of anti-money laundering, consumer compliance, and operational/business resiliency.

Three actions Andreas recommends fintechs take in the near-term:

1. Treat the guidance like a checklist. Contrary to what the guidance preamble says, fintechs should revisit the due diligence package they currently provide bank partners in light of the guidance's recommendations.