Regulatory Landscape Crystal Ball - Activate at Money 20/20 Highlights

Strategies for navigating the shifting regulatory landscape in embedded finance
December 20, 2023
On-demand video Regulatory Crystal Ball

The embedded finance industry stands at a pivotal juncture, with recent regulatory shifts significantly impacting how businesses operate. Treasury Prime's Activate user conference, hosted at the Venetian during Money 20/20, featured an expert panel discussing how to approach bank fintech partnerships, Banking as a Service (BaaS), and strategies for navigating regulatory scrutiny in the future. 

Seasoned professionals from financial institutions, including Sheetal Parikh, Associate General Counsel & VP of Compliance at Treasury Prime, Adam Shapiro from Klaros Group, and David M Robinson from Academy Bank deliberated on how recent regulatory changes are reshaping the dynamics of embedded finance programs. 

Regulatory landscape crystal ball top insights:

  • Interagency regulatory standards: Federal regulators issued key regulatory guidance in 2023 such as the Novel Activities Supervision Program and the Interagency Guidance on Third-Party Relationships. Parikh cites the increased attention from regulators as a positive indicator of the growing value of the embedded finance ecosystem. "It's a really great signal to see collaboration among the Fed, the FDIC, and the OCC to create a set of uniform standards," she says. Emphasizing the need for a formal process, Parikh says regulators expect banks to consistently document and follow methodologies in their partnerships with fintechs.
  • Stronger due diligence: Regulators express concerns about banks lacking sufficient oversight over their fintech programs, prompting the need for due diligence and a deeper understanding of their partners, according to Shapiro. “It’s up to the banks to prove they know what is happening,” he says, and “the winners in the know for the next few years are going to be the ones that come up with the best answer to that.”  To that end, Robinson underscores in-person interactions like meetings or visits with fintechs as crucial for risk assessment and fostering genuine partnerships. 
  • Banks collaborating to raise standards for exams: Robinson also encourages collaboration among banks to elevate overall standards for regulatory exams, emphasizing the need for consistency and uniformity to help ensure consistent and effective evaluations across the industry.

Watch the highlights:

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Discover the transformative potential of embedded banking for your company. Reach out to Treasury Prime, where we've successfully launched over 100 embedded finance programs with the largest network of banks in the industry. Benefit from our wealth of compliance expertise to ensure the safety and success of your program. Talk to the best embedded finance team in the industry.

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