The U.S. Federal Reserve System has published guidelines on topics to consider when conducting due diligence of a FinTech company.
The document discusses six key areas for analysis and refers to examples of situations. In addition to experience and qualifications, an assessment of legal standing and regulatory compliance, among other things, are mentioned. To protect the bank’s interest, it is necessary to examine the legal environment – the legality of the entity’s activities – and to consider including, in the agreement, an obligation to comply with relevant legal and regulatory requirements or the ability to access documentation or review the FinTech.
The key factors to analyse remain the financial position and risk management processes. Information security assessment considers a company’s ability to conduct business in a secure manner, testing and training for both employees and subcontractors, privacy and information security practices. The guidelines also address operational resilience, including business continuity and incident response planning, and the use of subcontractors.
Full guidelines are available at: https://www.federalreserve.gov/publications/conducting-due-diligence-on-financial-technology-firms.htm