The US regulator, the Federal Deposit Insurance Corporation (FDIC), recently proposed new, stricter rules for banks working with fintech companies. This initiative follows the bankruptcy of fintech Synapse, an event which revealed significant flaws in the protection of customer data and funds. From now on, banks will have to more rigorously identify the beneficial owners of the fintech companies they work with, and strengthen data security measures to avoid future incidents.
The consequences of Synapse’s bankruptcy on the fintech ecosystem
The fall of American fintech Synapse last May had profound repercussions in the sector. Indeed, this bankruptcy led to the freezing of hundreds of millions of dollars of deposits, causing major disruptions for savers and investors. Even more, this incident highlighted vulnerabilities regarding security and the management of customer data, raising serious questions about the reliability of fintech companies and the rigor of the banks that support them.
New regulations needed to protect customer data
Faced with this context, the FDIC has decided to intervene by proposing a new series of rules aimed at strengthening the protection of fintech customer data. According to this proposal, banks will now have to clearly identify the real owners fintech companies with which they collaborate. This requirement makes it possible to guarantee better transparency and make players in the sector more accountable.
The importance of digital transformation in the French banking sector
At the same time, the digital transformation of the French banking sector is progressing rapidly, leading to considerable challenges in terms of data security. Whether fintechs or bigtechs, many players access customer data without always strictly respecting the regulations in force. The new rules implemented by the FDIC could thus serve as a model, pushing French regulators to adopt similar measures to protect the precious resource that is the customer data.
Increased coordination for banks under “bank charter”
Banks with a bank charter have the ability to operate in several states without having to apply for a new license each time. However, this status comes with increased responsibilities, particularly in terms of cybersecurity. The FDIC’s new rules require banks to strengthen their auditing and risk management practices, ensuring better protection of customer funds and information.
The challenges of banking and financial regulation for fintechs
Prudential regulation has always played a crucial role in limiting digital transformation within banks. The new measures issued by the FDIC aim to ensure that this transformation takes place in a secure and controlled manner. In particular, enhanced authentication becomes a key requirement to clarify the customer consent to share its banking data, thus reaffirming the need for flawless security in the processing of this sensitive information.
In short, these new rules respond to a growing concern about data security in the fintech ecosystem, encouraging banks and other financial players to adopt more rigorous practices to protect the interests of customers.
- Context : Synapse’s bankruptcy highlighted flaws in the fintech ecosystem, tying up millions of dollars in deposits.
- New FDIC rule: Banks must now identify the beneficial owners of the fintech companies they work with.
- Data protection: Obligation for banks to better secure fintech customer data.
- Regulatory environment: Fintechs must comply more strictly with regulations to access customer data.
- Strong authentication: Customers must now explicitly consent to the sharing of their banking data.
