FDIC Eyeing Plan to Protect Customers From Fintech Failures (1)

Banks will have to closely monitor accounts maintained by third-party fintechs under a plan in the works from a key federal regulator intended to avoid a repeat of Synapse Financial Technologies Inc.’s collapse that saw millions of people lose access to their money.

The Federal Deposit Insurance Corp. is expected to release a proposed rule requiring banks to maintain ledgers of “for benefit of” accounts opened by third-party fintechs so the banks can identify how much end-user money they’re holding, according to people familiar with the matter who were unable to speak publicly about the coming proposal.

Banks would still ...