Fintech Partner Banks Facing 'Volatile Mix' of Supervisory Scrutiny
James Kim, a partner in Troutman Pepper's Fintech Industry Group, was quoted in the April 12, 2024 American Banker article, " Fintech Partner Banks Facing 'Volatile Mix' of Supervisory Scrutiny."
James Kim, a partner with the law firm Troutman Pepper, likens the recent surge in activity to supervisors clearing out low hanging fruit. He notes that the rapid expansion of BaaS arrangements in recent years — aided by intermediary groups that pair fintechs with banks, typically of the smaller community variety — has brought with it many groups that were not well suited for dealing with its regulatory requirements.
"Several years ago, there were real barriers for fintechs to partner with banks because of the cost, time and energy it took to negotiate agreements and pass the onboarding due diligence," Kim said. "Some of the enforcement activity we're seeing today is likely the consequence of certain banks, fintechs and intermediaries jumping into the space without fully understanding and addressing the compliance obligations that come with it."