Insights on Compliance in Financial Institutions and Fintech

In This Episode Come for the expert views on how the Synapse bankruptcy has led to regulatory consent orders for three banks (so far), stay to find out what happens when two regulatory lawyers and a self-declared ‘bank nerd’ editor break down the issues and the lessons for the rest of the industry. Matt Janiga from Trustly, Jesse Silverman from Troutman Pepper, and Kiah Haslett from Bank Director dive deep into what went wrong on the bank side, and what banks need to do to avoid a similar fate. Jesse has ideas for a better regulatory system, and says banks need to think beyond disclosures. Matt says banks need to step up their AML/BSA compliance systems and not try to do too much at once. Kiah gives a little history lesson and goes on a rant about how much of banks’ risk management systems are anything but. Everyone agrees with JP that banks keep stumbling over well-known issues, and that the risks of inaction are too big to ignore. Read the entire transcript here. Podcast Content: Chapter 1: 00:00:00 - Introduction: The Fallout at Synapse and Evolve Bank The hosts introduce the episode, setting the stage for the discussion on the Synapse collapse, Evolve Bank’s consent order, and broader fintech implications. Chapter 2: 00:05:30 - Banking as a Service (BaaS): Growing Pains and Third-Party Risks A look at the evolution of Banking as a Service, the role of middleware, and the challenges banks face in third-party risk management. Chapter 3: 00:14:45 - The Synapse Saga: What Went Wrong? Breaking down the Synapse bankruptcy, reconciliation issues, and the complex web of banks and fintechs involved in the debacle. Chapter 4: 00:26:00 - The Regulatory Gaps: Whose Job Is It to Watch? A discussion on the perceived regulatory gaps, the role of state regulators, and the absence of a unified oversight body for fintechs. Chapter 5: 00:38:15 - Consent Orders: Patterns, Themes, and Lessons Learned Analysis of recent consent orders issued to banks, recurring themes like AML, CIP, reconciliation, and what banks must address to stay compliant. Chapter 6: 00:50:00 - Fintechs and Banks: Managing Risk, Partnerships, and Expectations How fintechs and banks can work better together, focusing on due diligence, reconciliation processes, and board governance. Chapter 7: 01:02:15 - State Regulation vs. Federal Solutions: Is a New License on the Horizon? Exploring the potential for state regulators to create new license types for fintechs and why a federal framework might be needed. Chapter 8: 01:12:30 - Advice for Banks Entering Fintech Partnerships Practical advice for banks considering fintech partnerships: start small, evaluate processes, and ensure technology and compliance alignment. Chapter 9: 01:20:00 - The Future of BaaS: From Crisis to Opportunity A hopeful perspective on the future of Banking as a Service, predicting a “flight to quality” and stronger partnerships through better risk management. Chapter 10: Final reflections on the importance of effective risk management and why banks must embrace calculated risks to innovate and thrive. Related Content: Episode 551: This Spot Looks Soft Episode 547: The BaaS Bombs Drop + Synapse Bankruptcy Bank-Fintech Partnerships, Open Banking and AI...oh my! Episode 562: Hot Takes: Regulatory Headwinds for BaaS Episode 557: The Power of Resilience https://www.youtube.com/watch?v=NC4LF19DAfs