In a rapidly-changing financial landscape, partner banks face unique challenges when it comes to marketing compliance.
With increased regulatory scrutiny, the push for increased fintech partnerships to drive revenue, new and innovative products, and the growing importance of consumer protection, ensuring marketing compliance is non-negotiable.
For the 2023 State of Marketing Compliance report, we surveyed partner bank compliance leaders on their organizations’ compliance practices, concerns, and challenges. Here are the top marketing compliance trends and stats that partner banks should know to benchmark their initiatives in 2023.
Table of Contents
- Most banks work with 11+ fintech partners
- Fintech partner compliance oversight is important to banks
- Comprehensive oversight is a top challenge for partner banks
- Fair lending and UDAAP are top areas of regulatory concern
- Partner banks expect compliance teams to grow this year despite economic conditions
- Solve your bank’s marketing compliance challenges with PerformLine
Most banks work with 11+ fintech partners
Bank-fintech partnerships are becoming increasingly popular. For banks, partnerships with fintechs provide access to innovative technologies and solutions that they otherwise would have to develop in-house.
Banks can leverage fintechs’ expertise and benefit from their agility, speed, and innovation, enabling them to provide their customers with new and improved financial products and services, such as mobile payments, digital wallets, and personalized lending.
The majority (78%) of partner banks work with 11 or more fintech partners—56% work with 11 to 49 partners, and 22% work with 50+ partners. This trend is expected to continue as banks aim to expand their digital capabilities and provide customers with innovative financial services.
Fintech partner compliance oversight is important to banks
In the fast-paced world of financial services, partner banks have to keep a close eye on the compliance of their fintech partners.
It seems that most partner banks recognize and prioritize compliance monitoring of partners—a majority (78%) said that they monitor all their partners for compliance, while 100% of banks do at least quality assurance (QA) monitoring of their fintech partners.
This level of monitoring is critical, given the increased regulatory scrutiny of fintech partnerships in the financial industry.
Partner banks need to monitor fintech partners to ensure that they comply with various regulations and guidelines, such as fair lending, unfair, deceptive, or abusive acts or practices (UDAAP), and other consumer protection laws.
Monitoring fintech partners for compliance is not just about avoiding regulatory penalties—it’s also about ensuring customer safety, trust, and maintaining a positive brand reputation.
Comprehensive oversight is a top challenge for partner banks
While most partner banks prioritize oversight of their partners, that doesn’t mean it’s easy.
38% of partner banks said that comprehensive oversight is a top marketing compliance challenge. In this case, comprehensive oversight refers to the ability of banks to monitor their fintech partners’ marketing efforts across various channels, including social media, email, and the web.
The rise of bank-fintech partnerships has created a more complex environment for banks to monitor their partners’ marketing efforts.
Born out of the age of digital acceleration and innovation, fintechs typically operate with a more agile and experimental mindset than traditional banks, which can lead to marketing content that falls outside of established compliance guidelines.
As such, partner banks must ensure that all marketing content from fintech partners is reviewed for compliance and approved before it’s released, and they have to monitor this content once it has been published to ensure that it hasn’t been altered post-approval.
The more fintech partners a bank has, the more content and marketing channels there are to monitor for compliance, making it a challenge to ensure that all marketing content complies with regulations and guidelines, especially if the oversight process is manual.
Fair lending and UDAAP are top areas of regulatory concern
Partner banks reported that fair lending (21%) and UDAAP (21%) are top areas of regulatory concern for 2023. Regulators, especially the Consumer Financial Protection Bureau (CFPB), have been increasing their focus on both of these areas.
Partner banks should be diligent in their compliance monitoring of their fintech partners for fair lending and UDAAP. If a fintech partner engages in either of these practices, it could result in regulatory penalties for both the fintech and the partner bank.
In addition to fair lending and UDAAP, partner banks are also concerned about dark patterns (17%) and increased scrutiny on bank-fintech partnerships (14%).
Dark patterns refer to deceptive user interface design that can mislead or manipulate users into taking actions that they may not have intended. With the increasing use of digital platforms and financial products, partner banks need to be vigilant about the potential use of dark patterns in their fintech partners’ applications.
The increased regulatory scrutiny on bank-fintech partnerships is also a concern for partner banks. Several regulators, like the CFPB and the Office of the Comptroller of the Currency (OCC), have taken steps to increase oversight and regulation of these partnerships—read more about that here.
Partner banks expect compliance teams to grow this year despite economic conditions
Partner banks expect compliance teams to grow this year despite economic conditions—more than half (56%) expect their compliance teams to grow in 2023.
As the complexity and volume of regulatory requirements continue to increase, it’s becoming more difficult for banks to maintain compliance with limited resources.
Partner banks are recognizing that having a robust compliance team is essential for managing these challenges and ensuring that they remain in compliance with all relevant regulations.
By investing in compliance teams, partner banks can stay ahead of the curve, identify potential compliance risks before they become issues, and build a culture of compliance throughout the organization.
Solve your bank’s marketing compliance challenges with PerformLine
Struggling with comprehensive oversight of partners or affiliates? Our omni-channel compliance monitoring solution can help with that.
Trying to keep up with an ever-changing regulatory landscape? Our ready-to-use regulatory compliance rulebooks cover a wide range of existing and new regulations and guidelines for your industry and product(s).
Budgetary or bandwidth restraints? PerformLine can help ease the strain on your compliance team while increasing your coverage.
Don’t know where to start with your compliance program? We have years of experience working with similar companies and can get you started.
Whatever your biggest marketing compliance challenge(s) may be, PerformLine has a solution for you that’s automated, scalable, and efficient. Get started today.