BankThink: Bank-Fintech Partnerships Don't Need More Regulation

By: Scott M. Pearson | Eric M. Knight
– American Banker
Consumer Financial Services practice Leader Scott Pearson and Manatt Financial Services Associate Eric Knight wrote a column for American Banker saying that regulators’ criticisms of bank-fintech partnerships and calls for further regulation are misplaced sentiments that would “destroy the benefits they offer to the economy and the public.” 
 
Pearson and Knight say concerns over a lack of regulation for bank-fintech partnerships are unfounded, explaining that the banks, who are subject to broad supervision by state and federal regulators, are making loans while their fintech partners market and service the loans.  
 
“The bank is required to conduct rigorous due diligence on the fintech at the outset of the relationship, and to oversee and monitor the fintech's marketing and servicing of the loan throughout its life (even if the bank sells whole loans to the fintech after origination),” Pearson and Knight wrote. They also note that “fintechs that partner with banks often must maintain state licenses for brokering, servicing, collections and other activities, subjecting them to direct supervision by state licensing authorities.” 
 
The authors also highlight that further regulation of bank-fintech partnerships would significantly impact innovation in the sector, ultimately harming consumers, small businesses and the banks themselves. 
 
American Banker subscribers can read the full article here.  
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