- Federal Reserve issues paper exploring the current state of relationships between community banks and financial technology companies
- Report covers the benefits and challenges of such partnerships, as well as the key factors for success
- Document is a follow-up to previous diligence on how banks can ensure due diligence when forming partnerships with fintechs
Summary by Dirk Langeveld
The Federal Reserve has released a paper exploring the state of partnerships between community banks and financial technology companies. The report, based on discussions with these entities and other stakeholders, is designed as a resource for community banks seeking to improve their services by incorporating fintech.
The 21-page paper covers the types of partnerships and their benefits and challenges, as well as the key factors partners say are necessary for success. The relationships covered include banks using fintech to improve their own operations, enhance their customer-facing services, or update their own infrastructure with fintechs interacting directly with customers.
The report also identifies a commitment to innovation, thoughtful approach to connectivity, and alignment in priorities and objectives as major factors for success.
The Fed previously issued guidance to community banks on effective due diligence when forming partnerships with fintechs.