Fed preps tiered system for evaluating fintech access to services

Last May, the Fed set out guidelines for evaluating requests for accounts and payment services at Federal Reserve Banks by newly chartered fintechs. It sought to create a transparent and consistent set of factors when reviewing requests, based on six principles.

Following a public consultation, the Fed has added a supplement that creates a tiered system depending on the level of risk a firm poses.

For example, institutions with federal deposit insurance would be subject to a more streamlined level of review, those without insurance that are supervised by a federal banking agency would undergo an intermediate level of review, and those without insurance and not supervised by a federal bank regulatory agency would be subject to a stricter level review.

“With technology driving rapid change in the payments landscape, the proposed guidelines would ensure novel requests for access to Federal Reserve accounts and payment services are evaluated consistently and transparently to ensure a safe and innovative payment system,” says governor Lael Brainard.

The Fed is now inviting public comment on the supplement for 45 days.