Federal Reserve Publishes Fintech Risk Management Guidance

The Federal Reserve recently published guideposts for banks engaging in innovation.  The guidance was published in the December issue of the Consumer Compliance Supervision Bulletin.

The guidance largely focuses on risk management, recommending that banks identify and mitigate risks before introducing new fintech collaborations.  The following areas of focus are emphasized in the discussion of such risk management: board and senior management oversight, policies, procedures, training, risk monitoring, and third-party oversight.  The guidance outlines the characteristics of a strong institution with respect to each category.

The guidance also provides several targeted risk management tips specific to online/mobile banking and fair lending risks of targeted internet-based marketing.  Recommended steps include, among others, vendor management policies; fair lending risk policies and procedures for all marketing and out-reach initiatives; monitoring focused on complaints, marketing activities, and outreach activities; and implementing consistent and accurate consumer disclosures.