Jordan Glazier, Founder and CEO of Wildfire Systems.
Banks today are challenged by the need to move fast and innovate with fintech partners while maintaining the rigorous compliance standards that define trustworthy financial institutions. According to the American Bankers Association, “93% of fintechs find it challenging to meet compliance requirements,” creating significant risk exposure for banking partners who fail to properly vet their technology providers.
When evaluating technology partners, banks must prioritize three critical compliance areas to protect against regulatory exposure without sacrificing innovation.
UDAAP: Protecting Your Institution’s Reputation
Unfair, deceptive or abusive acts or practices (UDAAP) is a consumer protection standard that emerged from the Dodd-Frank Act. It empowers regulators to take action against practices that harm consumers, regardless of whether specific rules were violated.
For banks, UDAAP compliance means ensuring that every customer interaction through fintech platforms meets strict standards for transparency, fairness and clear communication. This includes everything from fee disclosures and product marketing to customer service interactions and complaint resolution processes.
When evaluating fintech platforms, banks must ask these questions about UDAAP compliance:
1. How does the platform ensure transparent fee disclosure across all customer touchpoints?
Platforms should implement standardized disclosure language across all digital interfaces, contracts and customer communications. Fees must be displayed prominently and be readable. Additionally, regular compliance audits must be conducted to confirm disclosures remain accurate, even as products or pricing evolve.
2. What review mechanisms prevent deceptive marketing language from reaching customers?
Platforms should implement a multifaceted approach to prevent deceptive language from reaching customers. For example, all customer-facing materials should undergo a structured compliance review before release, including legal and compliance team approval and scanning for high-risk keywords (e.g., superlatives like best, most, never and always) that could be misleading.
3. How are customer complaints monitored and analyzed for potential UDAAP violations?
A fintech platform should maintain a centralized complaint management system with issues logged and categorized, then tracked to resolution. Complaint data should be regularly analyzed to identify recurring themes or red flags that may indicate something that might be heading into the territory of unfair, deceptive or abusive practices.
Finally, fintechs should require mandatory training programs to ensure staff understand fair treatment standards, including customized scenarios designed for specific team members.
SOC 2: Validating Operational Security Excellence
System and Organization Controls (SOC) 2 (registration required) auditing is the gold standard for evaluating how service organizations protect customer data. It examines five core trust service areas, including accurate system processing and proper handling of personal information. Unlike basic security questionnaires, SOC 2 requires independent validation of controls over extended periods under real-world conditions.
Fintech platforms that comply with SOC 2 have implemented robust controls to protect sensitive financial data and maintain operational reliability. Banks should look for solutions that have SOC-2 Type II certification, which shows operational security excellence. Evaluating a platform should include asking the following three questions:
1. Beyond basic security, which trust principles does the platform address?
A SOC-2 Type II audit evaluates a platform against five trust principles: “security, availability, processing integrity, confidentiality and privacy.”
Rather than inspecting every piece of data in a system, auditors review the company’s policies and processes, known as “controls.” These controls demonstrate how the platform consistently meets the goals of the trust principles, providing assurance without requiring a full data inspection.
2. How recent is the certification, how long was the audit period and what were the audit findings?
The minimum window for an official SOC-2 Type II audit is six months. They should be updated every 12 months because controls can change quickly in tech companies. When reviewing a report, check for:
• The auditor’s overall opinion on whether the controls are reliable.
• Whether any controls failed to meet requirements.
• How management responded to issues: Did they explain the failure, fix it and provide proof it won’t recur?
If problems show up repeatedly or aren’t addressed well, it may signal higher risk and warrant closer review before selecting the partner.
3. What specific controls address financial data protection and transaction processing integrity?
Within a SOC-2 Type II audit, processing integrity is one trust criterion to ensure transactions are accurate, reliable and secure. Key measures include using secure coding to process data correctly, applying strict access controls so only authorized staff can make changes and separating production systems from testing/partner environments.
ADA: Ensuring Digital Accessibility Compliance
The Americans with Disabilities Act (ADA) (registration required) requires businesses to provide equal access to their services for individuals with disabilities, including online services. In the financial industry, digital accessibility centers on ensuring that individuals with visual, auditory, motor or cognitive disabilities can effectively use online banking services and fintech platforms. This includes everything from screen reader compatibility for visually impaired customers to simplified navigation for users with cognitive disabilities.
Banks are responsible for ensuring equal access to all services—and face direct exposure when partners don’t meet accessibility standards. So, it’s important to ask fintech partners these four key questions to ensure ADA compliance:
1. Does the platform meet WCAG 2.1 Level AA standards across all user interfaces?
Web Content Accessibility Guidelines (WCAG) 2.1 Level AA is a benchmark for digital accessibility. Platforms demonstrate compliance through third-party audits, automated testing results and user testing with individuals who have disabilities.
2. Are customer support channels accessible through multiple communication methods?
Effective platforms provide customer support through multiple channels, including live chat with screen reader compatibility, email support with plain text options, video relay services for deaf customers and phone support with TTY capabilities.
3. How does the platform ensure accessibility in mobile applications and API integrations?
Mobile accessibility requires native support for platform accessibility features like VoiceOver (iOS) and TalkBack (Android), proper labeling and gesture alternatives for users with motor disabilities. API integrations should preserve accessibility metadata when passing information between systems.
4. What testing protocols verify compatibility with assistive technologies?
Comprehensive testing includes automated accessibility scanning, manual testing with actual assistive technologies and user testing with individuals who have disabilities. Reliable platforms conduct ongoing testing as part of their development process.
Building A Compliance-First Partnership Strategy
Choosing a partner often comes down to asking: Will the platform strengthen or compromise our regulatory standing?
Banks that fail to prioritize UDAAP, SOC 2 and ADA compliance in their partner selection expose themselves to regulatory violations, financial penalties and reputational damage that can take years to repair. Proactively establishing these foundational compliance standards will set you up for successful long-term partnerships with fintech platforms.
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