FDIC Capital Rules May Push Banks to Rethink FinTech Partnerships

The Federal Deposit Insurance Corp.’s latest board agenda reads like a preview of the next major regulatory issues looming for big banks, and by extension, their FinTech partners.

The FDIC will consider a notice of proposed rulemaking Nov. 25 titled “Regulatory Capital Rule: Revisions to the Community Bank Leverage Ratio Framework.”

The meeting marks a formal step toward reshaping the simplified leverage ratio regime for community banks. Under the standard rulemaking process, the agency issues a notice, collects public comments, and then finalizes the rule with a publication in the Federal Register before an effective date is set. The implications concern small banks and their capital planning, including when they partner with FinTechs.

Also on the agenda is a final rule on “Modifications to the Enhanced Supplementary Leverage Ratio Standards for U.S. Global Systemically Important Bank Holding Companies and Their Subsidiary Depository Institutions; Total Loss-Absorbing Capacity and Long-Term Debt Requirements for U.S. Global Systemically Important Bank Holding Companies.”

Because this is a final rule, banks may expect binding changes sooner rather than later, and supervisory scrutiny will follow. The effect will cascade across large bank holding companies and their depository institutions, tightening capital and leverage back-stops at the top end of the banking sector.

A third agenda item is a final rule to adjust and index certain regulatory thresholds (for example, asset size triggers) and set the 2026 designated reserve ratio. These tactical changes may not grab headlines but matter for banks’ regulatory planning calendars and how they allocate resources to growth lines, risk divisions or new business models.

Compliance with these changes will move banks to revisit capital planning models, leverage projections, stress testing and portfolio growth plans. Community banks may find eligibility for the community leverage bank ratio narrower, so they may shift back toward risk-weighted capital regimes. Big banks will have to integrate the changes into their capital stack, which may raise the cost of funds or limit growth in capital-intensive lines.

Across the board, banks will need tighter internal governance, more frequent scenario testing and sharper capital return discipline. Supervisors will expect documentation of capital impacts from business line changes, including partnerships and exposures, so banks will begin to treat FinTech engagements through a capital lens.

Reshaping Risk Appetites

With capital and leverage constraints tightening, banks will reassess their risk appetite, particularly for embedded finance or banking-as-a-service (BaaS) programs. Many such programs require up-front technology investments, operational risk exposure and balance sheet usage. As a result, banks may prioritize FinTech engagements that align with minimal capital burden, such as faster ramp-up, strong credit underwriting and low incremental assets. Lengthy rollouts, high-risk models or unclear monetization may be shelved or delayed. The result could be that the embedded finance boom gets filtered through a capital constraint lens.

Tighter capital and leverage rules will make banks choosier about which FinTechs they back and how they price such relationships. The PYMNTS Intelligence report “Global Money Movement: How Digital Wallets Are Transforming Cross-Border Payments” found that 62% of banks are actively exploring partnerships with FinTechs for cross-border payments.

That highlights how prevalent bank-FinTech teaming remains. Even so, with capital costs rising, banks may demand stronger margins, higher fees, stricter risk sharing or co-investment from FinTechs.

If a FinTech pulls on a sponsor bank’s capital (because it drives asset growth, leverage or real-world assets), the bank will likely raise its price or reduce its commitment. FinTechs should anticipate increased due diligence, contract renegotiations and potentially narrower access to bank sponsors.

FinTechs that rely on sponsor banks must now see capital and leverage rules as central to the business model.

Three questions they need to ask:

How does my program affect my sponsor bank’s leverage ratio or risk-weighted assets?

Can my model deliver rapid scale and strong margins to justify the bank’s capital cost?

Will the bank reprice or downsize commitments if its capital burden shifts?

In this moment, capital and leverage rules are not just regulatory dial settings. They are business filters that determine which embedded finance plays move forward and which face headwinds.