FDIC Regulatory Revamp May Smooth Path to Bank Mergers, Formations and FinTech Partnerships

The Federal Deposit Insurance Corp. (FDIC), like other regulatory agencies, is rapidly being reshaped. The very structure of the agency may be drastically altered. A continuing rollback of rules and enforcement actions will have repercussions for banks and FinTechs alike.

The ultimate impacts of the changes are yet to be known. But there may be an acceleration of banking mergers and acquisitions, and digital-only players entering the industry, with the aim of injecting more competition into financial services.

The FDIC’s new acting chairman, Travis Hill, laid out an ambitious agenda at the very start of the new administration in January that sets a roadmap of what’s to come.

In that statement, he said he’d “conduct a wholesale review of regulations, guidance, and manuals” and “adopt a more open-minded approach to innovation and technology adoption, including (1) a more transparent approach to fintech partnerships and to digital assets and tokenization, and (2) engagement to address growing technology costs for community banks.”

In addition, the FDIC would seek to “encourage more de novo activity so there is a healthy pipeline of new entrants in the banking sector.”

This week, the FDIC held a vote, delaying or rolling back a series of rules and regulations, or setting in motion the machinery to rescind policies already in place.

Streamlining the Merger Process

As reported by PYMNTS, the FDIC seeks to rescind the group’s 2024 Statement of Policy on Bank Merger Transactions, replacing it — for the time being — with an earlier merger rule.

In the Federal Register notice that opens up the 30-day commentary period, the FDIC has stated that the 2024 policy has “added considerable uncertainty to the merger application process” and states that banks are burdened with proving benefits of proposed mergers against a backdrop where the 2024 policy does not offer “objective or quantifiable criteria regarding how the FDIC will evaluate this factor.”

The promise of smoother regulatory paths to consolidation within the banking space may give some tailwind to activity that’s already underway. S&P Global Market Intelligence has noted that there were already 11 deals announced in January, for a cumulative $678 million, compared to last year’s January tally of $567 million in deals. Coming into the year, 41% of bankers surveyed by S&P indicated at least some interest in acquisitions, up from 33% in the third quarter of last year.

And regarding new entrants, PYMNTS, in recent weeks has noted a groundswell of support for de novo activity.

Johnathan McKernan, tapped to lead the CFPB, stated in his nomination hearing last week that for industrial bank applications (industrial loan charters are among the avenues FinTechs use to become banks), the FDIC “harbored a presumption against deposit insurance and other applications by captive industrial banks.” Roughly five new banks have been formed annually between 2010 to 2023 across 71 new applications. That pace pales in comparison to the 144 charter applications approved annually from 200o to 2007.

Separately, the actions this week include a pause on rule-making tied to brokered deposits, obtained through third parties. The broadened scope of that rule, governing those deposits and how they are regulated, would have conceivably included FinTechs (and by extension, curtailed at least some joint activities between banks and FinTechs as the latter place their end customers’ funds with traditional FIs).

Elsewhere, a final rule governing deposits themselves, and how deposit insurance is conveyed to customers, has been delayed.

The rule, as detailed here, noted that “the FDIC is concerned that certain business relationships between IDIs and nonbanks may be confusing to many consumers. Consequently, the final rule requires clear disclosures that will better inform consumers as to when their funds are protected by FDIC deposit insurance.”

The rule also noted that there had been “an increase in the number of instances where financial services providers or other entities or individuals have misused the FDIC’s name or logo or have made misrepresentations about FDIC insurance.”

The rule, as detailed in the Federal Register, would have declared “a material omission if the non-bank’s website failed to state that the non-deposit products are not insured by the FDIC, are not deposits, and may lose value.”

Compliance has been pushed to March 2026. One key part of the rule-making process had not been addressed in this week’s FDIC actions: the continued examination of bank/FinTech record keeping. The transparency on those activities would come as bank-FinTech efforts are proliferating. According to PYMNTS Intelligence, 62% of banks are actively exploring partnerships with FinTech firms to elevate their cross-border payment solutions.

There have been reports that the Trump administration is mulling a scenario where the FDIC might become part of the Treasury Department, or might be combined with the Office of the Comptroller of the Currency. A restructuring of the agency would lengthen the pause or delays, but may not dampen the revisiting of merger guidelines and de novo applications — the subject of the “Promoting New Bank Formation Act of 2025.”