FDIC Moves to Create Industry-Backed Fintech Certification Body, With Plans to Provide Seed Funding
FDIC Moves to Create Industry-Backed Fintech Certification Body, With Plans to Provide Seed Funding #
The Federal Deposit Insurance Corp. is advancing plans to create a new independent body that would establish common standards and certify fintech companies and other technology vendors that serve banks, according to a draft term sheet obtained by Bloomberg Law.
The proposed organization, still in formation, would define baseline risk management criteria that banks, especially community institutions, could use to screen and onboard third-party service providers more efficiently. Rather than requiring every bank to perform its own bespoke assessment of the same fintech partner, the body would allow compliance information to be evaluated once, kept current, and shared across multiple institutions, according to the document.
The FDIC is working on the initiative alongside several major banking and fintech trade groups: the American Bankers Association, the Independent Community Bankers of America, the Bank Policy Institute, the Financial Technology Association, the American Fintech Council, and the Coalition for Financial Ecosystem Standards, an existing body that already issues certifications for bank-fintech partnerships.
Funding for the new entity is under discussion. According to a trade group email reviewed by Bloomberg Law, the FDIC is expected to contribute seed funding, though the agency declined to comment publicly on the effort.
Despite the certification mechanism, the draft term sheet makes clear that obtaining a seal of approval from the new body would not shield banks from regulatory scrutiny. The FDIC’s outline states that banks would remain fully responsible for safety and soundness, consumer protection, contract oversight, and ongoing monitoring of any third-party relationship, regardless of a partner’s certified status.
The initiative follows earlier reform efforts prompted by failures in the bank-fintech partnership space. Discussions about forming a standard-setting body first emerged during the first Trump administration, but they resumed after the collapse of Synapse Financial Technologies, the banking-as-a-service intermediary whose failure froze millions of dollars of consumer deposits.
One former FDIC official, Todd Phillips, now a director at financial services consulting firm Klaros Group, said the drive for common standards reflects the practical complexity of the sector. Independent standard-setting bodies are already established practice in fields such as accounting and cybersecurity, and the model has precedent in financial services: the Consumer Financial Protection Bureau similarly leaned on the Financial Data Exchange to set technical requirements under a 2024 open banking rule, before the Trump administration moved to rescind that regulation.
The FDIC’s approach differs from the Biden-era CFPB’s in one respect: the agency does not plan to formally endorse any single standard-setter or certification body, according to the draft term sheet.
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