Fintech apps, including popular neobanks, savings apps, cash advance apps and payment platforms, have grown rapidly in the US. Many of them look and feel like banks, but they are not banks. They typically partner with an FDIC-insured bank to hold customer deposits. Here is what that means for your money and what to check before you sign up.
A fintech app is a technology company that offers financial products and services through a software platform. It does not hold a bank charter issued by a federal or state regulator. Because it is not a bank, it is not directly insured by the FDIC or the NCUA. Instead, it partners with one or more FDIC-insured chartered banks to hold the actual customer deposits. The bank partner receives and holds the money. The app is the interface between the customer and the bank. This structure allows fintech companies to offer banking-style products without becoming regulated banks themselves, but it also creates a layer of complexity that consumers should understand before depositing money.
When a fintech app says your deposits are "FDIC insured," it means the deposits are held at an FDIC-member bank. The insurance is described as pass-through coverage, because it passes from the FDIC to the partner bank and, in theory, through to individual customers. For this pass-through insurance to be effective, the fintech must properly segregate customer funds from its own operating funds, maintain accurate and up-to-date records identifying the amount attributable to each customer, and comply with the requirements that make the pass-through arrangement valid. If the fintech fails and its records are incomplete or inaccurate, the FDIC may face significant difficulty determining whose money is whose, which can delay or complicate the insurance payout process.
Check the app's terms of service, its help or FAQ pages, or the footer of its website. Common phrases to look for include "banking services provided by [Bank Name]," "deposits held at [Bank Name], member FDIC," or "issued by [Bank Name], pursuant to a licence." Once you have identified the bank partner's name, go to FDIC BankFind at banks.data.fdic.gov and confirm the bank is currently FDIC-insured and active. Some fintech apps partner with multiple banks for different products — check each one separately.
There are two distinct scenarios to consider. First, if the partner bank fails, FDIC insurance should protect your deposits up to the standard limit, assuming the pass-through conditions described above are properly met. The FDIC would step in and attempt to restore access to insured funds quickly. Second, if the fintech app itself fails (separate from the bank), the situation is more complex. Your deposits should still be held at the bank, but access may be disrupted while the app's financial affairs are wound up. This process can take time, and you may not have immediate access to your money. This is why knowing the bank partner's name and having a separate way to contact them matters.
Before depositing significant funds in any fintech app, work through this checklist. Identify the bank partner by name. Confirm that bank is currently FDIC-insured using BankFind. Read the terms of service carefully to understand how funds are held and what happens if the app closes or is acquired. Check whether the app itself is registered with NMLS or any state regulator at nmlsconsumeraccess.org. Look up the app in the CFPB complaint database at consumerfinance.gov to see whether a pattern of consumer complaints exists.
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This page is general educational information only. It is not financial, legal, tax, credit or debt advice. Rules and regulations can change. Always verify current information with official sources before taking any action.