The Coalition for Financial Ecosystem Standards (CFES), an industry-led organization dedicated to establishing audit-ready standards for safety and soundness within bank partnerships, has announced the release of its Lending Module, accompanied by a Lending Checklist. This initiative aims to define clear expectations for compliance, risk management, and model governance across the lending ecosystem, providing consistency in bank–fintech collaborations amidst rapid technological advancements and evolving regulatory landscapes.
Developed in collaboration with industry participants such as FairPlay and Upstart, the Lending Standards within the module translate complex lending regulations into actionable frameworks. These frameworks cover seven critical areas, ranging from fair lending programs to model risk management, offering organizations guidance on implementing compliance requirements. By establishing consistent assessment criteria for lending operations, the module fosters a shared understanding between bank partners and nonbank lenders regarding effective risk management and regulatory compliance. Additionally, it addresses the impact of artificial intelligence (AI) and machine learning on credit decisioning by providing specific guidance on model risk management, validation processes, and governance frameworks relevant to technology-driven lending.
Sima Gandhi, Co-Founder of CFES, commented on the release, stating, “At a moment when supervisory approaches are evolving, clarity has never been more important. These standards provide banks and fintechs a shared foundation for managing lending risk and consumer protection, particularly as AI becomes central to credit decisions. This is an industry-led blueprint designed to create consistency and accountability that endures across regulatory cycles.”
This release occurs during a period of significant change for the industry. Recent regulatory shifts, including adjustments in fair lending supervision, underscore the importance of proactive self-regulation to ensure consistency beyond any single administration. Concurrently, AI and automated technologies are developing at a pace that often outstrips regulatory frameworks, necessitating industry-developed best practices to facilitate safe innovation. Modern bank–nonbank lending partnerships have also increased in complexity, with risk-sharing and technology models that existing frameworks were not designed to accommodate, creating uncertainties that these new standards aim to address.
CFES engaged a range of lending practitioners, including experts in model risk, compliance, and credit operations, to ensure the standards reflect real-world environments. The coalition also incorporated input from lending advocacy groups to account for diverse product types and business models and mapped requirements to supervisory expectations to ensure relevance and alignment with federal regulatory intent.
Kareem Saleh, CEO and Founder of FairPlay.ai, remarked, “Creating a healthy lending ecosystem requires clear expectations for fairness, transparency, and responsible technology use. By establishing a unified framework for model governance and consumer protection, CFES is helping the industry operationalize these commitments.”
The lending standards expand upon the Core Risk & Compliance Standards that CFES released earlier this year by introducing lending-specific specializations. These enhancements include more detailed expectations across the entire credit lifecycle, from marketing through servicing and collections. Eight new standards address credit model governance, validation, monitoring, and AI explainability. Furthermore, the module provides tailored guidance for consumer protection obligations under the Equal Credit Opportunity Act (ECOA), Fair Credit Reporting Act (FCRA), adverse action rules, and ability-to-repay expectations.
Nat Hoopes, Vice President – Head of Policy and Regulatory Affairs of Upstart, noted, “Banks, fintechs and regulators all benefit when expectations are clear and consistent. These standards provide a foundation for operating compliant lending programs, while the accompanying Lending Checklist offers immediate practical value, giving organizations a straightforward yes/no assessment of minimum controls needed before going live. This combination enables responsible innovation and improves outcomes for consumers and the financial system.”
To ensure the standards remain relevant amid evolving technology, regulation, and market dynamics, CFES plans to maintain dedicated working groups focused on lending, model risk, and responsible AI adoption. The coalition also intends to continue its engagement with federal and state regulators to support alignment and transparency across the ecosystem.
