10 Key Takeaways on Subledger Management for Effective Bank-Fintech Collaboration

In a recent discussion with industry experts, Kiah Lau Haslett of Bank Director, Dana Weinstein of Plaid, Koji Murase of Modern Treasury, and our Head of Payments, Keith Vander Leest, we discussed the importance of subledger management in ensuring compliance with the FDIC's proposed rule on custodial accounts. Here were 10 key takeaways from the discussion:

1. The proposed FDIC rule aims to ensure banks can accurately identify beneficial owners and balances within certain types of custodial deposit accounts used by fintechs.  
2. Subledgers are critical for banks and fintechs to have transparency and traceability into customer funds, especially in the event of a fintech failure or bankruptcy.
3. Real-time payments like RTP and FedNow are changing the reconciliation landscape, requiring instant balance updates rather than just daily reconciliation.  
4. Fintechs like Plaid are partnering with banks like Cross River that offer robust subledger capabilities to enable real-time visibility and control over customer funds.
5. Subledgers can also help banks improve efficiency in areas like BSA/AML monitoring by tying customer profiles to the subledger activity.
6. While the FDIC rule may be burdensome for some banks, investing in subledger technology can provide a competitive advantage in fintech partnerships long-term.
7. Fintechs need to carefully evaluate their bank partners' subledger and reconciliation capabilities, as this infrastructure will be critical as the payments landscape evolves.
8. Not all fintech-bank partnerships involve FBO accounts. BaaS programs and debit card programs may have different customer relationships and account structures.
9. Collaboration between banks and fintechs is key to developing the right technology stack to support evolving payment flows and regulatory requirements.
10. The potential change in leadership at the FDIC might impact the finalization of the proposed rule. Fintechs and banks should stay informed about evolving regulations.

Watch our full discussion here: