Fintech Takes S9 E2: Bank Nerd Corner: Compliance, Complexity, and the Gray Areas of Fintech
Oct 9, 2024
Kiah Haslett, Banking and Fintech Editor at Bank Director, shares her sharp insights on the latest FDIC proposed rule affecting custodial accounts. She debates whether smaller banks need different standards in the Banking-as-a-Service realm, emphasizing that size doesn't equate to complexity. Kiah critiques recent fintech ecosystem standards and calls out Mercury's compliance claims as a facade. Plus, she tackles tough questions on the definition of bank service companies and the nature of financial innovations like Buy Now, Pay Later. Compliance is more than just a trend—it's essential.
AI Snips
Chapters
Transcript
Episode notes
FDIC's New Rule on Custodial Accounts
- The FDIC's proposed rule defines custodial accounts with transactional features and mandates record-keeping for beneficial owners.
- This addresses risks inherent in high-volume transactions, especially in Banking-as-a-Service (BaaS).
Prescriptive Guidance and Bank Size
- Prescriptive guidance from regulators suggests banks are struggling to manage risks.
- Smaller banks engaging in BaaS increase their complexity, regardless of asset size.
Rethinking Regulatory Thresholds
- Smaller banks in BaaS may need stricter rules due to higher relative risk.
- Fintech levels the playing field, challenging traditional risk assessments based on size.