Pub. 10 2021 Issue 1

Pub. 10 2021 Issue 1 17 N ational and global fintech companies are becoming household names. We all likely have at least one application downloaded that is categorized as a fintech—even more so now due to the pandemic’s creation of reliance on technology to continue to foster relationships and financial savviness at more than an arm’s length away. Financial technology, more commonly known as fintech, was introduced in the 21st century and was initially referred to as the back-end systems of established financial institutions. This category of company has grown into more consumer-related services, which include industries such as retail banking, nonprofit, real estate, trading, education, and more. This category has transformed the financial landscape. Of course, all new, innovative, and exciting transformations that occur in the financial world also open the door to fraud, cybersecurity risks, and financial losses, pushing these companies toward the high end of the regulatory risk spectrum. While bank partnerships with fintech companies can be a smart financial decision and expansion of services, they are not an easy task to master. These concerns have not gone unnoticed. The Federal Reserve has closely monitored these companies transforming the financial services industry, noticed the potential for regulatory risk, and listened to the concerns of stakeholders. In December 2020, at a first-ever ICBA ThinkTECH Policy Summit, Federal Reserve Governor Michelle Bowman told bankers the “Federal By Rachael Stewar t , BKD Nat ional Financial Services Group Managing the Fintech Transformation Impact continued on page 18