‍Comment letter in response to Joint Agencies’ RFI on Bank-Fintech Arrangements outlines measures to foster responsible innovation and increase consumer access

Washington, D.C. (October 30, 2024)–The American Fintech Council (AFC), the premier industry association representing responsible fintech companies and innovative banks offering embedded finance, today submitted a comment letter in response to a request for information (RFI) on bank-fintech partnerships from the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller (OCC) of the Currency. AFC’s letter highlights the important benefits bank-fintech partnerships provide to historically underserved communities and community banks, as well as their positive effect on competition in the financial services industry. AFC also identifies leading risk management processes in bank-fintech partnerships and makes policy recommendations to encourage greater adoption of responsible innovations in financial services.

“As one of the only organizations that represents both innovative banks and fintech companies, we know that responsible bank-fintech partnerships have dramatically expanded access to credit and banking services in historically underserved communities and are crucial to the continued viability of community banks nationwide,” said Phil Goldfeder, Chief Executive Officer of AFC. “For the benefit of the millions of consumers that rely on products made possible by bank-fintech partnerships, we urge the agencies to adopt a consistent and modernized regulatory framework that supports these partnerships, encourages responsible innovation, and ensures consumer protection.”

In their comment letter, AFC emphasizes the crucial role of bank-fintech partnerships in driving competition within the financial sector, supporting community banks, and enhancing consumer protection through a shared responsibility approach to compliance. AFC’s recommendations to the Joint Agencies include measures to improve agency examination processes, provide clearer guidance, and promote leading risk management practices across the financial services industry. The letter also reiterates AFC’s calls to reconstitute the FDIC’s FDITech Office to its originally intended purpose and for the Joint Agencies to find ways to encourage the use of alternative data in lending.

“Responsible bank-fintech partnerships are critical to the continued innovation in and improvement of the financial services industry," writes Ian P. Moloney, SVP and Head of Policy and Regulatory Affairs at AFC in the letter. AFC recommends “that the Joint Agencies pursue significant education efforts for their examination staff specifically designed to educate these staff on the various types of bank-fintech models, activities conducted within the models, and leading risk management processes.” Also, noted in the letter, “AFC respectfully recommends that the Joint Agencies identify and implement relevant suptech tools to improve their oversight activities of regulated entities. By implementing suptech tools, AFC believes that examiners can more efficiently and effectively examine regulated entities and lower the costs associated with an examination for both the agency and the regulated entity.”

A standards-based organization, AFC is the premier trade association representing the largest financial technology (Fintech) companies and innovative banks offering embedded finance. AFC’s mission is to promote a transparent, inclusive, and customer-centric financial system by supporting responsible innovation in financial services and encouraging sound public policy. AFC members foster competition in consumer finance and pioneer products to better serve underserved consumer segments and geographies.

Read Full letter here.

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