BaaS Banks and Compliance: What You Need to Know

As banks continue to partner with fintechs, regulatory scrutiny continues to increase. To navigate this complex landscape, it’s important to have a solid understanding of what compliance means for banking-as-a-service (BaaS) banks.

In this blog post, we’ll cover the basics of BaaS bank compliance, why it’s important, and how to mitigate compliance risk across consumer marketing channels and fintech partners.

Table of Contents

What are the regulatory requirements for BaaS banks?

Some common regulatory requirements for BaaS banks include compliance with consumer protection regulations, implementation of appropriate risk management frameworks, and robust internal controls and oversight.

BaaS banks may also be subject to additional regulatory requirements depending on the specific financial products and services involved, such as lending, payment processing, or credit products. 

Do BaaS banks need to monitor their fintech partners or merchants?

Yes, BaaS banks need to monitor their fintech partners for compliance because BaaS banks are ultimately responsible for the financial products and services provided by their merchants, and may be held accountable for any compliance failures.

Some key areas of focus for monitoring fintech merchants may include regulatory and marketing compliance, risk management practices, and customer experience.

How are BaaS banks monitoring their fintechs?

BaaS banks may use compliance technology to monitor their fintech partners for compliance on an ongoing basis, such as PerformLine. 

BaaS banks that work with fintech companies can use PerformLine’s omni-channel compliance monitoring platform to monitor their fintech merchants across consumer channels and ensure that their marketing and advertising activities comply with applicable laws and regulations. PerformLine’s platform can help BaaS banks stay ahead of emerging regulatory requirements and industry standards, which can be particularly valuable in the rapidly evolving fintech landscape.

Which regulatory agencies oversee banks partnering with third parties?

There are several regulatory agencies that oversee banks partnering with third parties, including the Office of Comptroller of the Cyrrency (OCC), the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation, and State Attorneys General.

Why should BaaS banks review materials from their fintech partners before and after they are published? 

By reviewing marketing and advertising materials before and after they are published, BaaS banks can maintain compliance with regulatory requirements, minimize the risk of reputational damage, and strengthen the overall partnership with their fintechs.

Before publication, BaaS banks should review marketing and advertising materials to ensure that they do not contain false or misleading information, that they are consistent with the bank’s brand and values, and that they comply with applicable disclosures and regulatory requirements. 

After publication, BaaS banks should continue to monitor their fintech partners’ marketing and advertising materials to confirm that they haven’t been changed or altered post-approval.

PerformLine: The Trusted Platform for BaaS Bank Compliance

PerformLine’s omni-channel compliance monitoring solution was built to automate the monitoring and remediation of regulatory and brand compliance violations, on all internal and external channels including web, messaging, calls, email, documents, and social media. Our turn-key industry rulebooks are built on years of experience working with regulators and industry clients.

Speak to one of our experts today to learn more about mitigating your risk and ensuring brand safety so that your partnerships can thrive.