FDIC Requests Comments on Potential Program to Promote Banks’ Use of New Technologies: FDIC Requests Information and Comment Relating to the Potential Establishment of a Standards-Based Voluntary Certification Framework to Facilitate Banks’ Use of Financial Technology

Sullivan & Cromwell LLP - July 22, 2020
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On July 20, 2020, as part of its FDiTech initiative, the Federal Deposit Insurance Corporation (“FDIC”) published a request for information (the “RFI”) seeking public input on the benefits of a standards-based voluntary framework for certification of third-party models and other third-party technology products and services, and in particular services provided by financial technology companies. The purpose of such a program would be to reduce the costs and burdens of adopting technological advances, particularly by smaller and community banks. The FDIC recognizes the key role that technological innovations can play in transforming the business of banking and enabling regulators to supervise more efficiently and has indicated it is exploring opportunities, such as the RFI, to assist financial institutions in effectively complying with laws and regulations regarding management of third-party risks concerning the use of technology and models. The proposed framework would involve the establishment of a standard-setting organization and the creation of a voluntary certification process to assess conformity with standards. This memorandum provides additional details about the proposed framework and highlights certain questions the RFI poses with respect to the proposal.