Banking and Finance Law Daily Wrap Up, FINANCIAL TECHNOLOGY—Fintech Council asks regulators to preserve bank-fintech distinctions, (Jan 7, 2026)

By Nora Macaluso

The AFC said maintaining clear lines and roles is essential for consumer trust and transparency.

The American Fintech Council (AFC) sent a letter to federal regulators urging them to maintain clear distinctions between insured depositary institutions and non-bank fintech companies. “When non-bank companies market themselves as banks, or wantonly blur the line between insured depository institutions and other financial services providers, they undermine consumer trust, disadvantage responsible market participants, and complicate supervisory efforts for the very partnerships that are helping modernize the financial system,” said the letter, addressed to Federal Reserve Vice Chair for Supervision Michelle Bowman, Comptroller of the Currency Jonathan Gould, Federal Deposit Insurance Corporation Chairman Travis Hill, Consumer Financial Protection Bureau Acting Director Russell Vought, and Federal Trade Commission Chairman Andrew Ferguson.

“At a time when the line between banking and commerce is increasingly blurred, we must reinforce a simple, foundational principle: banks are banks, and non-banks are non-banks. AFC members have consistently sought to ensure consumers understand the distinct roles of the fintech companies and banks with whom they partner, but not all fintech companies act in the same manner as our members,” said AFC CEO Phil Goldfeder said in a statement accompanying the letter. “As a standards-based trade association, it is incumbent upon us to continue advocating for all industry participants to adopt best practices. These clear distinctions bolster consumer trust and support continued responsible innovation.”

“Responsible fintech providers” can bring benefits to consumers and markets, the letter said. Yet “clear delineation of roles between chartered, insured depository institutions and nonbank fintech companies is essential to preserving consumer trust, the integrity of deposit insurance, and the effectiveness of prudential supervision,” the AFC added.

“Ambiguity,” on the other hand, “complicates supervisory oversight, and increases the risk of consumer harm,” the letter said. Allowing bank- and FDIC-related branding and terminology that allows fintechs undermines clarity and creates unfair competition, the AFC said. “Third parties that suggest, explicitly or implicitly, that they are banks trade on the credibility of the banking system without bearing its obligations, including capital, liquidity, governance, and examination requirements. This not only confuses consumers, but also disadvantages responsible banks and fintech companies who seek to act in accordance with existing laws and regulations in this area, and therefore invest heavily in robust compliance frameworks, clear and accurate disclosures, and transparent models.”

“It is incumbent upon both financial institutions and their fintech partners to provide clear and conspicuous disclosures to consumers in order to provide them with a clear understanding of the terms of products and services being offered,” said the letter, signed by Ian P. Moloney, chief policy officer for the group. “When roles are clearly defined and communicated, consumers can better make informed choices about the risks they are taking, regulators can more easily identify and remediate issues, and banks can structure their partnerships in a way that aligns with their appropriate risk appetite and regulatory obligations.”

Companies: American Fintech Council

RegulatoryActivity: BankingOperations CFPB ConsumerCredit DepositInsurance FinTech PrudentialRegulation