Fintechs Face Heightened Hurdles To Gain And Retain Fed Access

The Board of Governors of the Federal Reserve System recently issued and invited public comment on proposed guidelines to be used by Federal Reserve Banks to evaluate requests for master accounts and/or access to Federal Reserve Bank (Fed) financial services, in order to support a more "transparent and consistent" approach to such requests.

Access to Fed services is sought by fintechs and other non-traditional financial services companies because a Fed account, and direct access to Fed financial services, would dispense with the need for the non-bank to use a traditional bank as an intermediary with the Fed. A Fed account and/or Fed access enables more efficient provision of services to customers and participation in the Fed's nationwide network, including settlement services, electronic transfers of funds through a variety of channels, electronic and paper check processing, and the ability to borrow from the Fed's discount window, among other benefits.