What does it mean for a licensee to provide processing services to a financial institution?

The assertion that a licensee acts on behalf of the financial institution without creating a consumer relationship accurately captures the core function of providing processing services. This means that the licensee is engaged in actions that serve the institution's operational needs, such as handling transactions, managing data, or coordinating service delivery, but does so without establishing a direct consumer relationship with the clients of the institution.

In this context, the licensee is facilitating the institution's functionality by supporting its processes, which can include anything from transaction processing to customer support related to those transactions. However, it is crucial that while providing these services, the licensee does not step into the role of a consumer of the institution, which would imply a personal financial relationship with the institution's products or services. Instead, the focus remains strictly on the institutional operations.

Understanding this distinction highlights the importance of the licensee's role in maintaining professional boundaries while still being integral to the financial institution's service delivery.