Security News > 2023 > September > Strong compliance management is crucial for fintech-bank partnerships

Bank-fintech partnerships continue to rise as financial institutions look to streamline operations, improve customer experiences, drive profitability, and manage risk and compliance efforts.

The guidance promotes standardization for assessing third-party risk and describes sound risk management principles when developing and implementing third-party risk management practices.

"You can't underestimate the importance of a fintech partner's compliance posture," said Rafael DeLeon, Ncontracts' SVP of Industry Engagement and a former bank examiner with the OCC. "If a fintech can't demonstrate a strong compliance management program, no bank or credit union should want to touch it. The risk is too high for potential consumer harm, and operational issues could lead to even more compliance costs and regulatory trouble. Who needs it?".

For fintechs, this means that a strong compliance management program is key to securing partnerships with banks and credit unions.

"Financial institutions are looking more closely at risk when evaluating fintech partners - and for good reason. Their exposure to risk is greater, not only opening them up to regulatory scrutiny but also risking their reputation," said Michael Berman, CEO of Ncontracts.

"Fintechs must prioritize risk and compliance if they expect to remain relevant and in business, and they must do so now. Over half of the banks and credit unions we surveyed plan to evaluate fintech partnerships in the next one to two years this should be a top priority."

News URL

https://www.helpnetsecurity.com/2023/09/20/fintechs-compliance/