January 23, 2024

S&P Global Market Intelligence Quotes Max Bonici on Banks Facing Federally Enforced Regulatory Actions

1 min

On January 23, 2024, S&P Global Market Intelligence quoted Max Bonici on a group of banking-as-a-service (BaaS) banks that accounted for a significant portion of enforcement actions last year. According to the article, in 2023, banks that provided BaaS to fintech partners accounted for 13.5% of severe enforcement actions issued by federal bank regulators. The banks are expected to continue to face such challenges in 2024.

Baas providers may also encounter the additional challenge of their CAMELS composite ratings—the scoring system regulators use to assess banks' capital adequacy, assets, sensitivity, and more—dropping as a result of negligence in their fintech partnerships.

"Regulators have to hold the management accountable, to the extent that stuff isn't being done. It wouldn't surprise me if that bears out in ratings,” said Bonici. “Generally, the management rating is a very powerful tool for them to use.”

S&P Global Market Intelligence also reported that many banks still see the benefits of BaaS, namely the financial incentive, in the wake of such challenges.

Click here to access the article.