July 20, 2020

On July 20, 2020, the FDIC released a federal notice requesting comment on standard setting and voluntary certifications for models and third-party technology providers. The notice and request for comment comes as part of FDiTech’s efforts to “engage bankers, fintechs, technologists, and other regulators on innovations that will lay the foundation for banking’s future” and to “support and promote the adoption of new technologies by financial institutions.” On the initiative, FDIC Chairman Jelena McWilliams said, “It is my goal that the FDIC lay the foundation for the next chapter of banking by encouraging innovation that meets consumer demand, promotes community banking, reduces compliance burdens, and modernizes our supervision.”

The FDIC wants to learn more regarding the benefits and challenges of collaborating with an standard-setting organization (SSO) and other stakeholders to create a standard-setting and a voluntary certification process. The typical standard-setting process involves a standard-setting organization (SSO) working with stakeholders, including government agencies, to develop a standard for a particular industry or sector of the economy. In applying this framework to third-party providers of technology and other services:

  • Financial institutions would have the ability to rely on certifications related to the third-party provider or certified models or other technology products and services; 
  • Financial institutions would not be required to use only certified third parties, models, or technologies; and,
  • Financial institutions would retain the flexibility to require certified third parties to meet different requirements that the financial institutions viewed as appropriate.

We’d urge your organization to submit comments on this important notice from the FDIC. FS Vector has a team of experienced financial services regulatory and policy professionals with deep knowledge of the FIDC’s innovation work and standard-setting organizations (SSO).  If you or your organization need assistance in the development and crafting of your comments, please reach out to FS Vector Partner, John Collins. Comments must be received by 60 days from publication in the Federal Register (September 18).