Summary
The FDIC is considering creating a "Banking Innovation Standards Development Organization" (BISDO) — an independent, voluntary standard-setting body that would develop standards and issue certifications to third-party service providers that partner with banks. A separate independent assessor would evaluate fintech responses to standardized due-diligence questions, with passing vendors receiving a certificate banks can accept as proof of due diligence. The effort could represent one of the most significant developments in federal oversight of bank-fintech partnerships in years, particularly helping community banks that lack resources to vet multiple tech providers.
Key Facts
- BISDO term sheet circulated among banking and fintech trade groups (dated July 21)
- Independent non-profit standard-setting body + conformity assessment (attestation/certification) program
- Participating groups: ABA, ICBA, Bank Policy Institute, Financial Technology Association, American Fintech Council, Consumer Bankers Association, Coalition for Financial Ecosystem Standards
- Certification: provider/solution/controls "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; compliance is NOT a safe harbor (evidence of sound practices only)
- FDIC in preliminary talks with Fed and OCC; neither has officially joined
- Precedents: FDIC 2023 RFI; PCI Security Standards Council; CFPB recognition of FDX
- Two meetings with trade groups so far; no timeline yet
Why It Matters
A credible, regulator-backed vendor certification standard would lower the cost of vetting fintech partners, expand the practical vendor universe for community banks, and reduce the duplication burden across the BaaS ecosystem. But key decisions remain unresolved — governance, funding, representation, whether participation becomes effectively mandatory, and how standards keep pace with rapidly changing technology. As one expert noted, "infrastructure is judged on execution"; whether BISDO becomes a relied-upon standard or "another well-intentioned framework on a shelf" will be decided in the coming months.