The Office of the Comptroller of the Currency (OCC), a US financial regulator, asserts that banks collaborating with fintech partners ought to be accountable for actively managing the risks connected to these alliances.

Acting Comptroller Michael Hsu of the OCC spoke about its opinions earlier this week at a Vanderbilt University lecture, according to Reuters.

Hsu has, in fact, long expressed worries regarding regulatory gaps in the US payments system, asserting time and time again that banks have to be in charge of efficiently and aggressively keeping an eye on any hazards associated with third-party relationships with fintechs.

Should banks be the only ones in charge of risk management?
Banks and fintechs are teaming up more frequently these days to promote change in order to better serve customer needs and streamline back-end operations.
 

However, as these digital ecosystems proliferate inside the financial services sector, it is still unclear who is ultimately in charge of risk management—from compliance to hacking and consumer protection.

In the US, there is a lot of sharing of responsibility across banking and fintech companies. However, it can be difficult for regulators such as the OCC to determine exactly where risk responsibility resides.

Hsu worries that when these collaborations grow exponentially, controlling many risks would become more difficult, especially when linked organizations have different objectives.

Hsu restated the OCC's position following the regulator's consent order to Blue Ridge Bank in Virginia, which did not address prior concerns brought up by

The OCC now asserts that banks should bear the final responsibility for risk. In contrast to a B2B functioning fintech, banks do, in fact, have greater resources and are the direct holders of consumer assets. But is this a fair strategy?

Whether it is fair or not, it undoubtedly simplifies regulators' lives when determining who is at fault in risk-related situations.

A number of fintech businesses have recently expressed support for a national bank charter that would codify risk responsibility laws. Hsu asserts that this does not, however, imply that fintechs should be exempt from regulations.

"In an attempt to attract new players or include a specific activity under the purview of bank regulation, we will not relax our standards, establish a unique framework, or adopt an unduly broad interpretation of banking."