WASHINGTON — The Treasury Department in a new report on financial technology urged bank regulators to finalize guidance relating to how banks manage their third party risk with fintechs.
The nonbank financial firms could increase competition in the sector, if they’re overseen correctly, the report said, but the lack of regulations compared to insured depository institutions “raises various public policy considerations.”
“Where new entrant nonbank firms are re-bundling core banking services outside the bank regulatory perimeter, there may be risks similar to those posed, for example, by the intermingling of commerce and banking,” the Treasury Department said in the report, which is part of President Biden’s competition executive order. “Some new entrant non-bank firms or their offerings may pose new or greater risks of reliability or fraud issues.”
The subject of bank-fintech…