Episode 10: FinTech Risk Management: A Framework for Success

In the latest episode of the Risk Intel podcast, SRA's Chief Financial Officer (CFO), Shawn Ryan, joins host Ed Vincent to discuss the evolving landscape of FinTech risk management. With his extensive experience in leading SRA's FinTech initiative, Shawn sheds light on the development of the FinTech Risk Maturity Framework and shares valuable insights into practical risk assessments and vendor due diligence. This episode unveils the importance of why banks should maintain a robust risk management practice when working with or onboarding high risk FinTech partners and highlights the need for a balanced approach to achieve strategic goals without compromising safety and soundness.

Understanding the FinTech Risk Maturity Framework:

Shawn explains that the FinTech Risk Maturity Framework was built upon SRA's existing enterprise risk management concept and incorporates the current regulatory guidance and principles for third-party risk management. By grading organizations on their risk management practices, the framework allows for a comprehensive evaluation of a banks FinTech risk program. Shawn emphasizes the significance of assessing business qualifications, governance, and information security practices when considering FinTech partnerships. This focused approach ensures effective due diligence and sets the stage for successful risk management in FinTech collaborations.

SRA recently updated the FinTech Risk Maturity Framework to ensure compliance with the recently released Interagency Guidance on Third-Party Risk Management. Learn more here.

Lessons from Practical Risk Assessments:

Drawing from real-world experiences, Shawn shares insights gained from assisting financial institutions in evaluating FinTech partnerships. He highlights the need for enhanced vendor risk management practices, as FinTech engagements introduce a different level of risk. Financial institutions must ensure that their due diligence processes are more thorough and encompass the unique challenges associated with FinTech relationships. Furthermore, Shawn emphasizes the importance of educating FinTech partners about compliance expectations and the need for continuous monitoring and robust risk management programs.

Striking a Balance Between Innovation and Risk:

Shawn's dual perspective as both a FinTech evaluator and a recent participant of completing the FinTech risk assessment process at SRA, enables him to stress the importance of achieving safety and soundness within the FinTech ecosystem. He emphasizes the symbiotic relationship between financial institutions and FinTechs, where disruptive innovation is enabled through rigorous risk management practices. By maintaining a high level of risk management, FinTechs can earn the trust of financial institutions and contribute to the industry's strategic goals.

Conclusion:

The episode concludes with a reminder of the critical role risk management plays in achieving strategic objectives while mitigating potential pitfalls. Shawn highlights the trade-off between risk and return, emphasizing how exceptional risk management allows financial institutions to execute their strategies effectively. The insights shared in this episode highlight the importance of the FinTech Risk Maturity Framework and the need for continuous evaluation and improvement in managing FinTech partnerships.

To gain further understanding of FinTech risk management and explore the practical applications of the FinTech Risk Maturity Framework, listen to the full podcast episode featuring Shawn Ryan, SRA's CFO.

Stay tuned for more valuable discussions on risk intelligence, regulatory compliance, and industry best practices from the Risk Intel podcast.