Regulators Take Tough Look at Small Banks' Partnerships with Fintechs

Source: American Banker

Small banks that partner with fintech companies can expect more governmental scrutiny of those arrangements, industry observers said in response to a recent enforcement action against a community bank in Virginia.

Under a public agreement last month with the Office of the Comptroller of the Currency, Blue Ridge Bank in Martinsville must bolster its oversight of fintech partners and improve its controls for the prevention of money laundering.

The move against the $2.8 billion-asset Blue Ridge comes as the OCC is focusing more attention on bank-fintech partnerships. 

"There's every reason to believe it's symptomatic of wider increased scrutiny, at a minimum from the OCC," said Jason Mikula, a former Goldman Sachs executive who writes the Fintech Business Weekly newsletter on Substack.