Overview
Action Items
- If your bank is considering a new product, you should consider and follow the guidelines, regardless of your primary federal regulator.
- Ensure any new or modified products developed in conjunction with a third party incorporate best practices and current regulatory standards.
- Contact us to review and help develop any new, modified or expanded bank products to ensure they are compliant.
OCC Risk Management Guidance for New, Modified or Expanded Bank Products
The OCC recently issued a bulletin for risk management related to new, modified or expanded bank products, replacing guidance issued in 2004. A link to the bulletin can be found here. The bulletin discusses the strategic, operational, credit and reputational risk related to new bank products, with a focus on new technologies and partnering with Fintech entities.
Specifically, the bulletin focuses on internal risk management, as well as the risk involved with working with a third party, such as a Fintech entity (see our prior client alert about successfully working with Fintech entities).
The principles in the bulletin are also consistent with Acting Comptroller of the Currency Noreika’s recent remarks with respect to both financial technologies and banks offering new products.
Although the OCC is attempting to foster an environment for banks to embrace new technologies in connection with their product offerings, the OCC is doing so within the existing framework of risk management and vendor management principles. Specifically, the main takeaway from the revised guidelines is that the OCC recognizes banks will be working with third-party vendors to develop and augment new products, and will hold banks to the OCC’s guidance on third-party vendor management.
Even if your bank is not regulated by the OCC, the principles embodied in the guidelines provide a comprehensive roadmap when considering offering a new or modified product.
We Can Help
We have extensive experience in helping banks develop new, regulatory-compliant products, especially in conjunction with third parties, such as Fintech entities. Please contact us if you are contemplating offering new products or thinking of modifying or expanding existing ones. If so, we can assist you with helping to ensure compliance, or if you are contemplating entering into new material contracts or modifying existing material contracts in connection with the product.
References
- OCC Risk Management Bulletin
- Barack Ferrazzano Client Alert Regarding Working with Fintech Entities
- Acting Comptroller of the Currency's Recent Remarks