Pub. 12 2017-2018 Issue 2

July/August 2017 13 Extraordinary Service for Extraordinary Members. 800-373-3000 | finsales@dbe.bz | www.databusinessequipment.com Digital Insight Technology is transforming our lives at an unprecedented pace. Digital Insight, an NCR company, empowers financial institutions to differentiate their digital banking by offering unique features and functionalities. Email DBE for additional information! DBE_JulyAug 17_NBA_DBE_JulyAug17_NBA 6/14/2017 3:54 PM Page 1 ■ Counselor’s Corner — continued on page 14 negotiations, but cannot fully meet their responsibilities through such collaboration. Even if banks are using the same products and services, those products may present different lev- els of risk to different banks, and each bank must have its own risk management tailored to its individual needs. The FAQs list several responsibilities that should be fulfilled on a bank-specif- ic basis 4 regardless of collaboration with others on other general responsibilities. Fintech/Marketplace Lending/Mobile Apps The OCC devotes specific attention to fintech, marketplace lending, and mobile payments apps: • Fintech company relationships may or may not be con- sidered to involve critical activities; the bank must make that determination according to principles contained in OCC guidance. Comprehensive and rigorous management is required for critical activities. The financial condition of startups with limited financial information still must be as- sessed. Banks may consider access to funds, funding sourc- es, earnings, net cash flow, expected growth, projected bor- rowing capacity, and other factors. Contingency plans are necessary in case of a startup failure. Third party service providers are not necessarily required to satisfy a bank’s credit underwriting guidelines. • For marketplace lending relationships, banks are cautioned to make sure they understand the relationships among the bank, the marketplace lender, and the borrowers, as well as the various types of risks posed in those relationships. Compliance with law, concentration and volume limits, and proper underwriting are each specifically referenced, among other things. Due diligence for marketplace lending should include consulting with appropriate business units, such as credit, compliance, finance, audit, operations, ac- counting, legal, and information technology. The Supple- mental Examination Procedures issued by the OCC earlier this year (discussed further below) also contain some pro- cedures that specifically address marketplace lending. • Banks are expected to comply with applicable risk manage- ment requirements when dealing with third party service providers in mobile payments environments. The OCC spe- cifically indicates that banks should work with such provid- ers to establish procedures for authenticating enrollment of account information that customers supply to the providers. Compliance Management Outsourcing & Other External Resources Banks may outsource some or all aspects of their compliance management systems as long as they monitor and ensure that third parties comply with current and future changes to con- sumer laws and regulations. The OCC reminds banks that strong compliance management systems include appropriate policies, procedures, practices, training, internal controls and audit sys- tems, as well as the commitment of appropriate resources.