Brooklyn Journal of Corporate, Financial & Commercial Law


Braeden Hodges

First Page



Financial technology (fintech) has ushered into today’s financial markets a wave of innovations that have revolutionized the way financial services are rendered and consumed. One such transformation is Banking-as-a-Service (BaaS): a partnership model through which nonbank businesses offer federally regulated banking products directly to consumers. By disintermediating the banking value chain, BaaS is democratizing access to financial services and lowering barriers to entry for many unbanked and underbanked individuals. These initiatives bring with them a number of concerns—such as data privacy risks, new forms of surveillance and discrimination, and economic instability—that are augmented by a systemic deficiency in regulators’ ability to understand and respond to complex and evolving fintech-related risks. Specifically, the United States’ overlapping state-federal regime of financial regulators has created a fragmented network of authority, exposing new and enticing opportunities for service providers to organize their activities outside the purview of regulators. Furthermore, the modern regulatory infrastructure was designed in the wake of the 2008 financial crisis and focuses almost exclusively on the propagation of risk within and among banks and large financial institutions. This Note argues that this system is ill-equipped to address BaaS‑generated risks and proposes that a solution may be found in a redefined regulatory perimeter.