Banking Agencies Provide FinTech Due Diligence Guidance

The FDIC, the Federal Reserve Board and the OCC (collectively, the "agencies") provided a due diligence guide to aid community banks with their risk assessments of FinTech companies.

In the guide, entitled "Conducting Due Diligence on Financial Technology Companies: A Guide for Community Banks," the agencies highlight the benefits of entering into relationships with FinTechs, including (i) improved products and services, (ii) more efficient services and (iii) lower costs, but also cautions that such relationships pose risks requiring community banks to conduct due diligence.

The agencies provide "relevant considerations, potential sources of information and illustrative examples" for conducting due diligence, including review of (i) business experience and qualifications; (ii) financial condition; (iii) legal and regulatory compliance; (iv) risk management and controls; (v) information security; and (vi) operational resilience.