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The New "Supply Chain" of Finance

by Starling Insights

Starling Insights Editorial Board

Nov 02, 2023


In an interview at the recent Money20/20 Conference, US Acting Comptroller Michael Hsu discussed how the Office of the Comptroller of the Currency (OCC) is adapting its oversight to supervise the new "supply chain" of financial services.

Hsu highlighted the increasing trend of banks outsourcing tasks to fintechs and vendors, creating complex, multi-layered relationships. "It's something we're going have to really grapple with, because I think the trend in banking, especially on payments, is more and more of this chopping up, if you will, of the different activities," he said.

US Bank regulators, including the OCC, have stepped up their scrutiny of third-party risk in recent months, issuing joint guidance in June that details how firms should monitor relationships with fintechs and other third parties.

"Essentially, they're going to be supply chains," Hsu said. "And I think we need to start thinking about it like a supply chain." While Banking-as-a-Service (BaaS) arrangements are relatively straightforward, more intricate partnerships involving multiple fintechs will receive greater scrutiny. Recognizing the rapid growth and constant change in the fintech space, the OCC has rebranded its Office of Innovation to the Office of Financial Technology.

“This is just part of the landscape,” Hsu asserted. “Part of that is to keep up with the growth and complexity. I feel like we do have a pretty good overall sense of what’s going on, but as we’ve talked about, it’s complex, it’s constantly changing. So just trying to stay on top of it does require a ton of energy.”

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