FDIC’s Capital Rules Could Reshape FinTech-Bank Partnerships

New regulatory changes from the Federal Deposit Insurance Corporation (FDIC) are poised to reshape the banking landscape, with far-reaching implications for banks and their FinTech partners. On Nov. 25, 2025, the FDIC will consider a notice of proposed rulemaking titled “Regulatory Capital Rule: Revisions to the Community Bank Leverage Ratio Framework,” signaling the start of a potential overhaul in how banks approach capital planning, particularly in their relationships with FinTechs.

The proposed changes, which focus on capital and leverage requirements, come at a critical time for the banking sector. Banks of all sizes will be forced to re-evaluate their risk appetites, particularly for programs like Banking-as-a-Service (BaaS) and embedded finance. These programs, which often rely on bank partnerships with FinTechs, will face new challenges as tighter capital rules could alter how banks price these relationships, how they assess risk, and how they integrate new business models into their portfolios.

Key FDIC Proposals and Their Implications

1. Revised Leverage Ratio for Community Banks

The FDIC’s proposal to adjust the Community Bank Leverage Ratio (CBLR) framework could have a significant impact on how community banks engage with FinTechs. Smaller institutions may find the eligibility for the CBLR becoming narrower, which could prompt them to return to traditional risk-weighted capital regimes.

This change will likely force community banks to take a more conservative approach to their capital planning. They may reconsider certain partnerships, especially those requiring significant upfront investment, operational risk exposure, or balance sheet usage. FinTech partnerships could be subject to stricter capital burden analyses.

“Community banks will need to reassess their risk appetite, especially when it comes to embedding financial products or offering Banking-as-a-Service,” said Sarah Matthews, senior regulatory analyst at Deutsche Bank.

2. Final Rule on Global Systemically Important Banks (G-SIBs)

For the largest U.S. banks, the FDIC is also considering a final rule on enhanced leverage standards, tightening the capital requirements for global systemically important banks (G-SIBs) and their subsidiary institutions. This rule, likely to be enforced sooner rather than later, will increase scrutiny on the capital and leverage of major players in the industry.

For these institutions, it means that partnerships with FinTechs will come under intense supervisory scrutiny, as banks must ensure that the capital allocated to these partnerships doesn’t jeopardize their overall capital stack or growth potential. Banks may impose stricter terms on partnerships, including higher fees, stronger risk-sharing arrangements, and more diligent due diligence before agreeing to new collaborations.

3. Indexing of Regulatory Thresholds and Reserve Ratios

Alongside these high-profile changes, the FDIC will also implement a series of smaller but important modifications to regulatory thresholds, including adjustments to asset size triggers and the 2026 designated reserve ratio. While these changes might not garner as much immediate attention, they play a critical role in how banks allocate resources to their growth lines and risk divisions.

Impact on Banks’ Capital Strategies

For banks, these changes are forcing a rethink of capital planning models, especially when it comes to embedded finance and BaaS programs. The cost of capital-intensive models could skyrocket, leading banks to reevaluate their partnerships with FinTechs based on capital efficiency and potential returns.

“The new rules will likely push banks to choose FinTech partners more carefully, prioritizing those with clear, rapid growth potential and minimal capital burden,” said Marcella Green, financial strategist at JPMorgan.

Repricing of FinTech Partnerships: A New Capital Lens

As a result of these regulatory changes, FinTechs will need to assess their partnerships through a capital lens, asking themselves how their models align with their sponsor banks’ new capital constraints. Specifically, they will need to consider:

1. Leverage and Risk-Weighted Assets
   FinTechs should anticipate that their models may affect a sponsor bank’s leverage ratio or risk-weighted assets (RWA). For example, partnerships that drive asset growth or involve balance sheet usage may become more expensive for FinTechs due to the capital burden they impose on the bank.
2. Scale and Margins
   Banks are expected to prioritize rapid scale and strong margins in their FinTech partnerships to justify the capital costs. This means that FinTechs with scalable business models and strong underwriting may have a better chance of securing favorable terms.
3. Repricing and Downsizing of Commitments
   FinTechs relying on sponsor banks must prepare for the possibility that banks will reprice or even downsize their commitments if the partnership increases the bank’s capital burden. Co-investment and risk-sharing provisions may become more common, with FinTechs required to contribute more capital to offset the bank’s exposure.

Shaping the Future of Embedded Finance and BaaS

With capital and leverage rules playing an increasingly central role in business decisions, banks will become more selective about which embedded finance and BaaS partnerships they pursue. As a result, the rapid growth of the embedded finance sector may face headwinds, especially for models that carry higher risk or require long ramp-up times.

Challenge	Impact on FinTechs	Bank Strategy Shift
Capital Constraints	Higher cost for banks to support FinTechs	Banks may demand stronger margins and more risk-sharing
Regulatory Scrutiny	Increased due diligence, longer negotiation times	Banks will need clear documentation of capital impacts
Long-Term Scalability	Models with unclear monetization may be delayed	Banks will favor scalable FinTechs with minimal capital risk

While FinTechs have played a pivotal role in transforming financial services in recent years, their partnerships with banks are now more critical than ever in light of these regulatory changes. The landscape is shifting from one of rapid growth to more cautious, capital-conscious collaboration.

Conclusion

The FDIC’s regulatory capital rule changes will have a significant impact on how banks approach FinTech partnerships moving forward. With capital costs rising and regulatory scrutiny increasing, both banks and FinTechs will need to be more strategic about how they work together. While the era of rapid, expansive growth in embedded finance may face some headwinds, capital-conscious collaboration could lead to more sustainable and mutually beneficial partnerships in the long term.

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