Agencies unveil guide for small banks in assessing risk related to fintech relationships

Helping community banks assess risks when considering relationships with financial technology companies is the aim of a new guide issued Friday by the federal banking agencies.

In separate releases, the agencies said the guide – Conducting Due Diligence on Financial Technology Companies: A Guide for Community Banks – is intended as a resource to cover six areas of due diligence that community banks can consider when exploring arrangements with fintech companies. Those are: business experience and qualifications, financial condition, legal and regulatory compliance, risk management and control processes, information security, and operational resilience.

The 20-page guide contains “illustrative examples” of due diligence in each of the areas outlined.

The guide also highlights practical sources of information that may be useful when evaluating fintech companies, the agencies stated.

Agencies issue guide to help community banks evaluate fintech relationships