In this episode of the COMPLY Podcast, I sat down with my co-host Rhonda to debrief on our recent banking industry compliance roundtable and highlight key themes and takeaways from the event.
Discussion points include:
- Social media compliance for mortgage and loan officers
- Insights on the compliance review process of marketing materials
- Best practices for bank-fintech partnerships and marketing compliance
- Common BSA/AML challenges for fintechs
Show Notes:
- Streamline Compliance Review with PerformLine’s Document Review: https://performline.com/blog-post/streamline-compliance-review-with-performlines-document-review/
- The Compliance Checklist for Bank-Fintech Partnerships and BaaS Providers: https://content.performline.com/compliance-checklist-bank-fintech-partnerships-baas-providers
- Upcoming Events: https://events.performline.com/upcoming-events
- Connect with Rhonda: https://www.linkedin.com/in/rhonda-mcgill/
- Connect with Gianna: https://www.linkedin.com/in/gianna-kennedy/
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About COMPLY: The Marketing Compliance Podcast
The state of marketing compliance and regulation is evolving faster than ever, especially for those in the consumer finance space. On the COMPLY Podcast, we sit down with the biggest names in marketing, compliance, regulations, and innovation as they share their playbooks to help you take your compliance practice to the next level.
Episode Transcript:
Gianna:
Hey COMPLY Podcast listeners, and welcome to this week’s episode. This week I sat down with Rhonda McGill, PerformLine’s Senior Director of Customer Marketing and my podcast co-host, to discuss some key takeaways from our first banking industry compliance roundtable. As always, thanks for listening and enjoy!
Gianna:
Hey, Rhonda, welcome back to the COMPLY Podcast.
Rhonda:
Hey, Gianna. It is so good to be with you again.
Gianna:
It feels funny welcoming you to the podcast that you’re a co-host on. But I’m super excited to be doing another episode with you this week.
Rhonda:
And you know I’m always excited to be here with you. It’s always funny to be on this side doing the speaking.
Gianna:
So Rhonda, today we’re gonna talk about a few of the key themes and takeaways from a recent banking industry roundtable with compliance leaders in this space that happened last week. For those who aren’t familiar, we’ve been doing this industry roundtable format with the mortgage group for quite a while, but we just hosted our first roundtable event for the banking industry. Rhonda, do you want to give a quick background on these roundtables, how they work, and their purpose?
Rhonda:
Absolutely, thanks so much, Gianna. So the industry roundtables came about because, as most of our listeners know, I worked in the mortgage industry as a director of compliance, and that was kind of my background. But I always found compliance to be kind of that lonely space because there were very few groups that one could join. When I joined the PerformLine team, one of the first things I wanted to do was create a space for compliance experts to connect and share best practices, and believe it or not, that’s been almost four years ago.
Rhonda:
My, how time flies! So this year, I wanted to try to expand the roundtable and thought it would be great to do it with the banking industry because how we bank as customers has really evolved, thanks to fintechs who are instrumental in helping banks reimagine how to connect with consumers. I’ve been grateful to meet some excellent subject matter experts from the legal side of the business along the way. When I was able to phone my friends, Chris Mattoon and Kimberly Holzell, to share my vision, they said yes.
Rhonda:
Chris is an attorney with over 20 years of successfully leading startup and scale-up governance, legal enterprise risk management, and corporate compliance programs to drive revenue growth and market share expansion in the fintech and payment, credit card, and credit union industries. Kim is a longtime friend of PerformLine. She’s sat in on a few webinars with us and has assisted me in the past with a couple of roundtables. Before joining Goodwin, where she is a partner, she worked for the CFPB and headed up examination teams at large financial institutions. At Goodwin, she advises banks and fintech clients offering tech-enabled consumer financial services on compliance with consumer financial service laws and prepares them for supervision by financial services. So who better to have sitting with me for this roundtable?
Gianna:
Awesome. Yeah, these roundtables are so great and like you said, the mortgage ones have been going on for almost four years and they’ve really turned into a close-knit group. They’re super chatty, always willing to talk about their challenges and everything they’re going through. It’s a great community, so I’m super excited about this banking one. I think it’ll be really helpful. I’m super excited to see what this evolves into. Awesome. Well, let’s jump into some of the recap of the event.
Funny enough, we kicked off the discussion with our banking group with a lot of talk around mortgages and loan officers. Do you want to cover some of the key topics that were discussed, like co-marketing, loan officer relationships with realtors on social media, and the monitoring of loan officers across the web and social?
Rhonda:
Sure. So even in the banking space, mortgage loan officers or originators seem to be the one area that results in the most questions, especially regarding ensuring there are no RESPA violations related to LOs as they compete for business. Also, the simple act of soliciting business on social media and ensuring there are compliance guardrails in place was important to the bank experts on the roundtable. It seems many banks believe self-promotion is not allowed, but they’re okay with LOs sharing what the bank puts out without additional commentary. Similar to the mortgage industry, banks are constantly chasing down LOs regarding their NMLS numbers and trying to wrangle in the usage of vanity names and URLs. So, like the mortgage industry, banks have their woes in the mortgage space as well.
Gianna:
Yeah, absolutely. Banks or non-banks, mortgage is the same, loan officers are the same. They’re all facing the same challenges. It was funny to me that this was the first topic discussed outside of our mortgage roundtable.
Rhonda:
I know. I was like, are we at a mortgage roundtable?
Gianna:
No, that’s what I said. But it was a great discussion, very collaborative. Going off that, the group also talked about the review process for marketing materials for compliance, not just from mortgage, but from all internal departments and external partners. It seems like most participants agreed there’s a lot of content to review, much of which gets sent back with feedback and then resubmitted, which takes significant time. Do you want to summarize that discussion?
Rhonda:
Yeah, Gianna, there was a question from the group regarding industry standards, like what percentage of pieces sent for compliance review require edits and resubmission. Kim Holzell gave her perspective, saying regulators aren’t necessarily looking for the percentage given compliance feedback, but are more concerned about the entire compliance review process itself. Is it documented? Is it efficient and streamlined? The process has shown up in consent orders, so this was an excellent reminder of why it’s important to document your processes and make sure they are being followed. Communication between the bank and the fintech, or the bank and the loan officer, or even internal departments, is crucial so everyone understands the process and their responsibilities within it.
Gianna:
Yeah, it is a lot to review all this content. Even myself, I obviously don’t work in compliance, but I look at a bunch of content every day and review, edit, and approve it from a marketing perspective. Not even taking into account the compliance side of things, since we’re not a highly regulated industry, but it still takes a lot of my time. I can only imagine what these people are going through and how much it really takes of their day.
Rhonda:
It is very similar to our process, but theirs is more overwhelming. When you have so much coming at you, you’ve got to stay on top of it because if there’s a violation and you let it slip out, you can potentially harm the enterprise overall. So it’s a lot to handle.
Gianna:
Yeah, there’s a lot at stake for sure. It was interesting to hear Kim’s perspective and her feedback and advice for those in this space. So there was also a discussion about FDIC and fintech advertising, specifically for banks partnering with fintech. What are some ways banks can protect themselves from regulatory scrutiny in these partnerships, and what should they look out for?
Rhonda:
Starting with a strong agreement around marketing is a good first step. Add a marketing review provision in the contract stating that the bank will review and approve everything public-facing at every stage. This isn’t to be
nit-picky, but the bank is responsible for ensuring those items are compliant. When partnering with a fintech to offer a product, they have to follow compliance as they normally would, ensuring the fintech isn’t misrepresenting the product. There have been consent orders and guidance making clear that fintechs must disclose they are partners of the bank and not a bank themselves. Banks should review the marketing as if it’s their website. This requires a balance because some may partner with multiple fintechs, making it challenging to scale. Having a solid monitoring process is critical. Some lacked this and were relying on human oversight, which can become unsustainable over time.
Gianna:
We also talked about the bank perspective versus the fintech perspective. For fintech, running everything by the bank seems tedious and unfavorable because it delays marketing materials. But it comes down to having a good relationship, open communication, and a set process in place, which is crucial for these partnerships to be successful.
Rhonda:
Exactly. They don’t want to nitpick, but if you make material changes, the bank needs another glance. A couple of words can change the direction entirely. It’s just an extra piece of the checkmark.
Gianna:
We talk about that all the time too. A change of even one word can change the entire context and lead to significant issues. It’s a balancing act, but it seems both banks and fintechs want what’s best for the consumer, which should be the center point of these partnerships.
Rhonda:
That’s what I gleaned from the roundtable. Everyone was concerned about the consumer, showing there are good banks wanting to make more conveniences and opportunities for consumers, not make their lives harder.
Gianna:
Yeah, it’s always great to see that. Lastly, there was a discussion about BSA compliance, particularly regarding fintech. Not so much our area of expertise, but Chris talked about common challenges he’s seen in that space. Do you want to talk through some of those?
Rhonda:
Absolutely. This intrigued me because my compliance background started in the AML space. Recent consent orders reveal fintechs often lack adequate reporting and attention from senior management and the board regarding compliance programs. Fintechs frequently struggle with maintaining independence and allocating sufficient resources as they grow. Adequate staffing and training are critical for tasks like enhanced due diligence and transaction monitoring, especially as fintechs scale. Significant concerns arise from poor setup for transaction monitoring, leading to regulatory findings and consent orders. Issues occur with managing flagged transactions, especially with a backlog or lack of resources. fintechs need to establish metrics for severity and urgency to ensure timely response to red flags. Avoiding backlogs and addressing flagged issues promptly and efficiently is crucial. Aligning with policies and procedures is essential. The theme is the importance of adequate staffing, alertness to compliance issues, and timely addressing them before regulators discover them. Top-down buy-in ensures everyone is aligned on compliance, equipping teams with tools to protect the business, avoid costly fines, and prevent reputational damage.
Gianna:
Thank you so much, Rhonda. This was a lot of conversation condensed into, I don’t know, 10 or 15 minutes?
Rhonda:
We can pack in a lot of information when the two of us get together in a short period of time. I appreciate you for that.
Gianna:
Yeah, we sure can. Lots of discussion jam-packed into a quick summary. Thank you so much. Again, this was great. I love listening in on the roundtables and then debriefing with you, talking about what we got out of it, what we learned, and the key takeaways. I’m excited to do this again in a couple of months for our mortgage roundtable and then next time for our next banking roundtable. We’re going to keep the roundtables growing.
Rhonda:
Yeah keep it going. We’d love to hear from people. What other roundtables or focus groups would you like to see? So many areas of the financial services industry sometimes lack external connections. I enjoyed it. It was great to hear folks say they wanted to do this again. I’m excited.
Gianna:
Absolutely. It was great to see everybody participating. Sometimes focus groups can feel like people are afraid to speak up, but everyone did a great job sharing thoughts, asking questions.
Rhonda:
We’re in a safe space, no names and details are disclosed. It’s not a session to gather information to shout out to the world, but an opportunity to bring people together to share best practices. That’s important.
Gianna:
Exactly. We hear from our audience all the time that they like hearing what’s going on with other people in their space. What are others doing, hearing, what are the regulators up to, and what are the trends? We’ve found it really helpful for everyone. We’ll continue these roundtables and, like Rhonda said, if there’s any other industry or vertical you’d like a roundtable for, let us know. Shoot me or Rhonda a message. We’re always open to feedback and ideas. Thank you, everybody, for listening. Thank you, Rhonda. This was a lot of fun as always.
Rhonda:
Always! Look forward to the next time.
Gianna:
Thanks for listening to this week’s episode of the COMPLY Podcast! If you’re interested in joining the next banking compliance roundtable, make sure you subscribe to COMPLY and PerformLine to be the first to know when registration opens. I’ll also link to our Events page in today’s show notes where you can see all our upcoming roundtables, webinars, and other events. We hope you enjoyed today’s episode and we’ll see you next time!
Rhonda McGill 