Independent Banker - December 2023 - 19

Next: Board building processes 
" [The new guidance] ... makes it easier,
simpler and cheaper for the third parties
to know they are dealing with similar
sets of rules from all the different banks. "
-LANCE NOGGLE, ICBA
What is included
in the federal
agencies' final
guidance?
 Third-party riskmanagement
lifecycle
guidance
 Planning
 Due diligence and thirdparty
selection
to offer with only in-house resources,
Noggle says. In the past decade,
there has been a dramatic increase
in nonbank fintech firms offering
innovative products in partnership
with regulated financial institutions.
According to Finastra's global
survey of financial institutions in
2023, 56% of respondents said they
planned to enter fintech relationships
in the coming 12 to 18 months,
citing reduced operational costs as a
key motivator.
With banks under increasing
pressure to serve rapidly evolving
customer service needs, Finastra
says its research " demonstrates the
recognition from banks that they
cannot navigate these waters alone. "
While the interagency guidelines
apply to financial institutions
only, fintechs are also paying
close attention. Noggle says that
smart fintechs will incorporate the
new guidelines into their product
offerings, asking, " How can we satisfy
regulatory requirements, so banks are
comfortable doing business with us? "
Bankers should expect fintechs
to use the guidance as the basis for
due diligence requests, contract
negotiation positions and the need
for ongoing monitoring procedures.
For example, fintechs need to
demonstrate they are protecting bank
customers' information as rigorously
as the bank itself.
" It also makes it easier, simpler and
cheaper for the third parties to know
they are dealing with similar sets of
rules from all the different banks, "
Noggle says.
More from ICBA
To find fintechs that keep
community banks' needs
top of mind, get involved
with ICBA's ThinkTECH
Accelerator. Learn more at
icba.org/thinktech
Third-party risk management
final guidance: next steps
Fed governor Michelle W. Bowman
voted against the final guidance,
saying that while she supports making
expectations clearer, the guidance
failed to " mitigate regulatory burden
on smaller institutions. "
Bowman called the guidance a
" helpful step to promote sound thirdparty
risk management " yet wanted
to ensure the guidance was not
burdensome to community banks and
 Contract negotiation
 Ongoing monitoring
 Termination
 Governance guidance
 Oversight and
accountability
 Independent reviews
 Documentation and
reporting
 Guidance for supervisory
reviews of third-party
relationships
To read the final guidance
in full, visit bit.ly/
IBnewguidance
was tailored to their needs.
In announcing the guidelines,
the agencies stated they planned
to " engage with community banks
immediately and develop additional
resources. " However, there has
been limited feedback on how the
guidelines are working in practice,
according to Noggle.
" Time will tell if this is really
meeting the needs of community
banks, " he says, " but on initial read, it
looks positive. "
Susan Thomas Springer is a writer
in Oregon.
independentbanker.org // 19
http://bit.ly/ibnewguidance http://bit.ly/ibnewguidance http://www.icba.org/thinktech http://www.independentbanker.org
Independent Banker - December 2023

Table of Contents for the Digital Edition of Independent Banker - December 2023
