FDIC Launches Initiatives on Fintech and Financial Reporting by Banks

With respect to the financial reporting initiative of FDIC, twenty technology firms from across the country have been invited to participate in the competition. The participating firms will develop proposed solutions over the next several months and present them to FDIC for consideration; these firms represent leaders in the financial services, data management, data analytics, and artificial intelligence or machine learning fields. These modern tools—and lessons learned in future competitions—are expected to help make financial reporting seamless and less burdensome for banks, provide more timely and granular data to the FDIC on industry health, and promote more efficient supervision of individual banks.

Meanwhile, the FDIC request for information seeks input on whether a standard-setting and voluntary-certification program could be established to support financial institutions' efforts to implement certain models (such as credit underwriting models) and manage model risk by certifying or assessing certain aspects of the models. Input is also sought on whether this program could be established to conduct due diligence of third-party providers of technology and other services by certifying or assessing certain aspects of the third-party providers' operations or condition. FDIC is especially interested in information on models and technology services developed and provided by financial technology companies, also referred to as fintechs. 

In terms of input, FDIC is interested in comments regarding initial due diligence and ongoing monitoring elements associated with third-party providers of technology and other services that support a financial institution's financial and banking activities such as deposit, lending, and payment functions. FDIC also is interested in comments regarding due diligence for other types of providers such as third-party providers that support a financial institution's corporate activities such as payroll and human resources. FDIC seeks public input regarding all aspects of establishing a standard-setting organization, qualifying certification organizations, and implementing a voluntary conformity assessment process. FDIC is also considering, and seeking comments on, whether and how the FDIC supervisory and examination efforts would need to be modified to facilitate a financial institution's use of a certified model or a certified third party of outsourced technology services.

Related Links

• Press Release on Certification Program
• Federal Register Notice on Certification Program
• FDIC Letter on Certification Program
• Press Release on Financial Reporting Initiative

Comment Due Date: September 22, 2020

Keywords: Americas, US, Banking, Fintech, FDiTech, Operational Risk, Outsourcing Arrangements, Artificial Intelligence, Machine Learning, Reporting, Credit Risk, Third-Party Arrangements, FDIC