The FDIC introduces a new rule requiring banks to retain fintech customer data following the Synapse scandal.

• The Federal Deposit Insurance Corporation (FDIC) on Tuesday proposed a new rule that requires banks to maintain more detailed records of customers who use fintech apps, following the failure of tech firm Synapse which led to thousands of Americans being unable to access their accounts.
• According to an FDIC memo, fintech firms that partner with banks must maintain records of account ownership and daily balances, as per the rule.
• Many fintech apps pool customer funds into a single large account, relying on either the fintech or a third party to maintain ledgers of transactions and ownership.

The Federal Deposit Insurance Corporation (FDIC) on Tuesday proposed a new rule that requires banks to maintain more detailed records of customers who use fintech apps, following the failure of tech firm Synapse which led to thousands of Americans being unable to access their accounts.

According to an FDIC memo, fintech firms that partner with banks must maintain records of account ownership and daily balances, as per the rule.

Fintech apps typically pool customer funds into a single large account at a bank, which is maintained by either the fintech or a third party through ledger tracking.

The Synapse collapse, which affected more than 100,000 end users of fintech apps including Yotta and Juno, has left customers with funds in "for benefit of" accounts unable to access their money since May due to the risk of shoddy or incomplete records from the nonbanks involved.

The regulator stated in a memo that consumers may have believed their funds were FDIC-insured due to representations made about placing those funds in FDIC-member banks.

If the fintech provider fails, it would aid a bankruptcy court in determining who is owed what, FDIC officials stated Tuesday during a briefing.