According to a top U.S. bank regulator, banks that collaborate with financial technology businesses to provide banking services ought to aggressively manage the risks connected to those partnerships.

Acting Comptroller of the Currency Michael Hsu has long voiced concerns regarding some regulatory vulnerabilities in the payments system, highlighting the regulators’ obligations to make sure banks are keeping an eye out for dangers arising from third-party arrangements.

In order to offer its clients banking services like checking and savings accounts, nonbank fintech companies frequently collaborate with banks. However, Hsu is worried about what he has referred to as the “exponential growth” of those collaborations since it could lead to a muddying of roles when several firms—sometimes with disparate incentives—share responsibility for risk management.

Hsu made his remarks on Wednesday at Vanderbilt University, a few weeks after Virginia-based Blue Ridge Bank received a consent order from the Office of the Comptroller of the Currency for neglecting to address earlier issues the regulator had raised about the bank’s interactions with fintech firms.

According to the bank, its efforts to restrict its fintech relationships since June were not reflected in the consent decree.

Two consent orders pertaining to bank-fintech agreements were also made public by the Federal Deposit Insurance Corp. in January.

According to Hsu, the OCC does not intend to offer fintech companies any preferential treatment, even though the regulator encourages their bids for a national bank charter.

“We will not… lower our standards, create a special regime, or take an overly expansive view of banking to entice new entrants or in the hope of bringing a particular activity into the bank regulatory perimeter,” he said.

(Adapted from Reuters.com)