WASHINGTON D.C. – The feds are hitting the pause button on a deep dive into the increasingly murky world of bank-fintech partnerships. The Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, and the Office of the Comptroller of the Currency (OCC) announced today a 30-day extension to the public comment period regarding their Request for Information (RFI) on arrangements between banks and financial technology companies.
Originally slated to close September 30, 2024, the comment window now remains open until October 30, 2024. The agencies claim the extension is to allow for “more time to consider the request, prepare comments, and address the questions posed.” But seasoned observers see a scramble to understand the rapidly evolving landscape of digital finance and the potential for systemic risk it introduces.
The RFI itself is broad, seeking input on the “nature and implications” of these bank-fintech arrangements. What that really means is the agencies are trying to figure out just how much exposure the banking system has to potentially shaky fintech ventures. They’re specifically looking for information on risk management practices, a critical area given the often-innovative – and sometimes reckless – business models employed by these companies.
The delay isn’t just about giving the public more time to write letters. It suggests the agencies themselves are struggling to keep pace. Fintech firms are moving at warp speed, launching new products and services that traditional banks can’t match. Partnering with these firms allows banks to offer cutting-edge features, but it also introduces new vulnerabilities – from cybersecurity threats to compliance failures.
While the agencies aren’t directly accusing anyone of wrongdoing, the move signals a heightened level of concern. The potential for a major fintech collapse – and its ripple effects throughout the financial system – is a real threat. The feds are essentially trying to build the plane while it’s already in the air, hoping to identify and mitigate risks before they become a full-blown crisis.
Those looking to weigh in on the matter can find the Federal Register Extension Notice attached to the official release. Agency contacts for further information are: FDIC’s Carroll Kim (202-898-7389), FRB’s Meg Nelson (202-452-2955), and OCC’s Stephanie Collins (202-649-6870). The release was issued at 3:30 p.m. on September 13, 2024, and last updated the same day.
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