Conducting Due Diligence on Financial Technology Companies

A Guide for Community Banks

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency published a guide that is intended to be a resource for community banks (its fundamental concepts also can benefit banks of varying sizes) when performing due diligence on prospective relationships with financial technology (fintech) companies. Community banks can tailor how they use relevant information from the guide, based on their specific circumstances, the risks posed by third-party relationships, product, service, or activity offered by the fintech company. The guide focuses on six key due diligence topics, including relevant considerations, potential sources of information, and examples, which we highlight.