FDIC Mulls Standards Body to Streamline Bank-FinTech Oversight

The Federal Deposit Insurance Corporation is considering an industry-led standards organization that could certify FinTech companies and other bank service providers against common risk-management benchmarks, potentially reshaping how banks vet and oversee outside partners.

The proposal, outlined in a July 21 draft term sheet obtained by Bloomberg Law, would establish the Banking Innovation Standards Development Organization, or BISDO, together with a voluntary certification program called Risk-Assessed, Manageable Partnerships, or RAMP. According to an analysis by Ballard Spahr, the initiative could become one of the most significant changes in the federal approach to bank-FinTech partnerships and third-party services in recent years.

The plan responds to a persistent problem: Banks often conduct overlapping but inconsistent reviews of the same vendors, while providers repeatedly answer similar requests in different formats. A uniform framework, per the draft, would standardize information that can be “assessed once, refreshed over time, and reused by multiple banks.”

According to the analysis, the framework could particularly benefit community banks with limited compliance resources. Providers could gain clearer expectations and spread assessment costs across multiple relationships, while supervisors could receive more comparable information. But certification would supplement, not replace, each bank’s responsibility for deciding whether a provider fits its specific risks, negotiating contracts, integrating systems, monitoring performance and maintaining oversight.

BISDO could develop, adopt or recognize standards aligned with supervisory expectations. Independent qualified assessors would evaluate providers and individual solutions, while an authoritative registry would record whether certifications are active, suspended or withdrawn. The proposed program also contemplates ongoing monitoring, provider reporting, feedback, escalation and corrective-action processes, as well as an emergency “circuit breaker” to suspend a certification in exceptional circumstances.

Possible standards could cover third-party risk management, governance and internal controls, cybersecurity, operational resilience, information security, consumer compliance, Bank Secrecy Act and anti-money laundering controls, complaint management, due diligence, continuing monitoring and business continuity.

The potential reach is broader than banking-as-a-service. As Ballard Spahr noted, the framework could apply to technology and nontechnology firms, novel and legacy providers, customer-facing and back-office functions, and standards tailored to particular products, platforms, models or control domains. BISDO could also incorporate or build upon existing standards rather than recreate every benchmark.

Participation would be voluntary, and absence from the registry would not put an organization on a blacklist. At the same time, certification also would not provide either a regulatory endorsement or a safe harbor. The draft says banks would remain accountable for safe and sound operations, legal compliance, consumer protection and supervision of outsourced activities. Ballard Spahr warned that the absence of a safe harbor could reduce the incentive for supervised institutions to rely on the program, even if adherence serves as evidence of sound risk management.

That issue is among several open questions. The organizers still must decide who will govern BISDO; how banks, FinTechs, regulators, consumer representatives and other stakeholders will share authority; how the body will be funded while preserving its independence; and which services should receive the first standards. Details also remain unsettled for certification methodology, assessor qualifications and oversight, registry management, standards updates and integration into federal and state examinations.

Bloomberg Law reported that the FDIC is working with major banking and FinTech trade groups and may provide seed funding. The Office of the Comptroller of the Currency was also expected to join the effort. The FDIC declined to comment, and no formal proposal, final governance structure or implementation timetable has been announced.

The initiative follows heightened scrutiny of banking-as-a-service arrangements and the 2024 collapse of Synapse Financial Technologies, which stranded consumers’ funds. It also revives an idea explored under former FDIC Chair Jelena McWilliams. If BISDO moves forward, its central test will be whether a voluntary credential without legal protection can still become influential enough to reduce duplicative reviews while preserving bank accountability.

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