Summary
The FDIC is exploring creating a "Banking Innovation Standards Development Organization" (BISDO) — an independent, voluntary public-private standard-setting body that would develop uniform standards and issue certifications for third-party service providers that partner with banks. A separate independent assessor would evaluate fintech responses to standardized due diligence questions; passing vendors would receive a certificate banks could accept as proof of due diligence. The aim is to reduce the massive duplication where hundreds of banks ask the same questions of the same vendors, and to help community banks that lack resources to vet multiple tech providers. It follows years of heightened scrutiny of bank-fintech and BaaS relationships.
Key Points
- BISDO term sheet circulated among trade groups (dated July 21); two meetings held so far
- Independent non-profit standard-setting body + conformity assessment (attestation and certification) program
- Participating groups: ABA, ICBA, Bank Policy Institute, Financial Technology Association, American Fintech Council, Consumer Bankers Association, Coalition for Financial Ecosystem Standards
- Certification would let a provider/solution/controls be "assessed once, kept current and used by multiple banks"
- Scope: third-party risk management, governance, cybersecurity/operational resilience, consumer compliance, BSA/AML, complaint management, information security, due diligence, business continuity
- Fully voluntary for banks and fintech vendors; compliance is NOT a safe harbor (evidence of sound practices only)
- Precedents: FDIC 2023 RFI; PCI Security Standards Council; CFPB recognition of FDX for open banking
- FDIC in preliminary talks with Fed and OCC; neither has officially joined
- Benefit: lowers cost of vetting partners, expands practical vendor universe for community banks, more predictable exams
- Open questions: governance, funding, representation, whether effectively mandatory, how standards keep pace with technology
- Paul Schaus (CCG Catalyst): "If a credible certification lowers the cost of considering a partner, it will expand the practical vendor universe for a bank in a way nothing else on the table does."