When Lincoln Savings Bank struck a partnership in 2017 to process direct deposits for Cash App, it was a big break for the small, century-old lender based in Cedar Falls, Iowa. The Venmo-like app, part of Jack Dorsey’s financial services company now known as Block, was growing quickly. By partnering with Cash App and other fintechs, Lincoln increased its customer count from 18,000 in 2014 to more than 2 million by 2019.
But things changed when more than a dozen examiners from the Federal Deposit Insurance Corp. arrived at Lincoln’s headquarters in 2019 to probe the company’s anti–money-laundering and customer identification oversight of Cash App and other fintechs that worked with Lincoln, including mobile banking platform MoneyLion. In the end, the FDIC struck a confidential agreement with Lincoln that stopped it from onboarding new customers through its fintech operations, according to five people familiar with the company’s interactions with the regulator. That agreement remains in effect today.
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