Fintech partnerships: Risk and compliance strategies for 2026

Building on lessons from 2025, we’ve gathered key insights to help financial institutions strengthen their approach to fintech partnerships in 2026. While these collaborations drive innovation and growth, they also introduce new layers of risk. Without strong oversight, partnerships can expose institutions to regulatory, operational, reputational, and consumer protection challenges.

Whether your institution already has a fintech partnership program or is planning to launch one in 2026, here are key considerations and best practices to guide your approach:

Risk Management and Governance

Strong governance is the foundation of a successful fintech partnership program. Consider these best practices:

• Keep risk assessments current and update them whenever fintechs introduce new features, products, or processes.
• Provide board-level visibility into partnership risks, controls, and overall program performance through clear documentation.
• Request timely updates to fintech partners’ policies and procedures when regulatory changes impact your institution.
• Implement continuous monitoring controls to identify and address emerging risks promptly.

Lay the foundation for effective oversight by setting governance standards upfront and clearly communicate as changes arise. While certain arrangements may require exceptions based on product type or features offered, it is critical to document the overarching governance framework and establish a process for recording and approving exceptions. This approach promotes transparency, consistency, and regulatory alignment across all relationships.

Payments Compliance and Operational Readiness

Fintech partnerships present unique operational and compliance challenges due to complicated payment flows and For Benefit Of (FBO) accounts. To strengthen internal controls and maintain regulatory confidence, institutions should:

• Implement daily reconciliation processes to maintain accurate ledgering and catch discrepancies early.
• Establish clear protocols for ledger access and reporting.
• Develop enforceable contingency plans to address payment disruptions and ledger inconsistencies quickly.

Although regulators may eventually require direct, continuous, and unrestricted ledger access, no formal rules exist yet. Institutions should proactively prepare by implementing rigorous reconciliation processes and robust reporting standards.

Contracts: The Foundation of Accountability

Well-structured, clearly defined contracts help manage risk, support compliance, and protect consumer interests in fintech partnerships. They should explicitly address the following:

• Rights and responsibilities of each party, including their obligations, deliverables, and performance standards.
• Data security and privacy provisions, including ownership, breach response, and third-party access restrictions.
• Audit rights for financial institutions to conduct or request periodic audits, especially for Anti-Money Laundering (AML) and Compliance Management Systems (CMS).
• Indemnification clauses to protect the institution from fintech errors, particularly around adherence to Reg E and Reg Z.
• Subcontractor and vendor approval to mitigate downstream risks and maintain consistent compliance standards.

Scaling with Control

As fintech partnerships accelerate, financial institutions must balance rigorous oversight with the need to drive growth. Scaling effectively demands a proactive approach to compliance and risk management. To achieve this, financial institutions should:

• Conduct ongoing due diligence and monitoring to match the pace of fintech expansion.
• Evaluate staffing capacity for compliance functions, especially for AML alerts and Suspicious Activity Report (SAR) filings.
• Consider outside support for managing SARs when internal resources are stretched.

Financial institutions are required to submit SARs through the e-filing system within the mandated timeframes. Because this process often begins with Unusual Activity Reports (“UARs”) shared by fintech partners, clearly documenting the determination date and escalation steps is critical for timely and compliant SAR filings.

Regulators Support Innovation but Demand Strong Controls

Recent guidance reflects an openness to innovation in financial services, provided it is anchored in strong governance and effective risk management. Institutions must implement dynamic controls that adapt as the risk profile of each fintech partnership changes over time. This means anticipating heightened scrutiny on liquidity management, governance frameworks, and board-level risk assessments.

Audits are becoming more rigorous, moving away from basic compliance checks to examine the effectiveness of controls and the root causes of issues. Examiners increasingly review complaint trends, remediation logs, and escalation processes to determine whether institutions are resolving problems at their source.

From an auditor and examiner perspective: If it’s not documented, it didn’t happen. Every monitoring and governance activity should be thoroughly recorded, current, and easily accessible.

Consumer Protection and Marketing Oversight

Fintech partnerships introduce innovative capabilities, including modern, consumer-focused marketing strategies using digital channels and emerging platforms many traditional institutions have not fully adopted.

To reduce risk, all fintech promotions must be clear, accurate, and compliant with regulations such as Unfair, Deceptive, or Abusive Acts or Practices (UDAAP), Fair Lending, and the Servicemembers’ Civil Relief Act (SCRA). Financial institutions should maintain a compliance framework that addresses current and emerging regulatory requirements to provide ongoing oversight across marketing activities.

Best practices to prevent, detect, and remediate consumer harm:

• Require partners to submit all marketing materials and proposed changes for review and approval prior to launch, documenting compliance considerations.
• Use external resources like Better Business Bureau (BBB) reviews along with partner complaint logs to identify potential concerns.
• Analyze root causes of complaints to improve future marketing campaigns and disclosures.
• When a partnership ends, confirm that the fintech promptly removes all references to the institution across platforms to prevent confusion or misrepresentation.

We Can Help

Success in fintech partnerships depends on balancing innovation with strong governance controls, proactive compliance collaboration, and consumer protection measures.

At Elliott Davis, we help financial institutions strengthen governance frameworks, implement robust compliance programs, and prepare for regulatory scrutiny. Our team offers tailored audit services and risk assessments designed to safeguard your institution and support sustainable growth.

Contact us today to learn how we can help you stay compliant and competitive.

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The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.