NEW YORK—The acting Comptroller of the Currency is expressing concerns that the rise of fintech services and digital banking could spur financial risks and potentially a crisis over the long term.
"I believe fintechs and big techs are having a large impact and warrant much more of our attention," Michael Hsu told a New York conference, noting the encroachment of fintech companies into the traditional financial sector, including via partnerships with banks, was creating more complexity and "de-integration" across the banking sector, Reuters reported.
"My strong sense is that this process, left to its own devices, is likely to accelerate and expand until there is a severe problem, or even a crisis," Hsu said.
Banks and tech firms, in an effort to provide a seamless customer experience, are teaming up in ways that make it more difficult for regulators to distinguish between where the bank stops and where the tech firm starts, said Hsu, according to Reuters. And with fintech valuations falling as financing costs rise, bank partnerships with fintechs are increasing, he said, the report added.
Creating Risks
That could create IT risks around information security and resilience, and also raises customer protection issues, said Hsu.
"I worry increasingly about the 'unknowns' and am concerned that the less familiar risks of this digital transition are unlabeled and thus unseen,” Reuters quoted Hsu as stating. “As we learned from the 2008 financial crisis, risks that are unseen have a tendency to grow and later to be the source of nasty surprises.”
The Very Best in CU Reporting. For You. For Free. Or Your Money Back.
Don’t forget to check your Spam/Junk email folder if you haven’t been receiving your free, popular and daily CUToday.info news headlines.
And if you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time.
CUToday.info has received very positive response from readers following the move to an improved provider of the daily headlines, but many also noted they did need to go to their Spam/Junk folder and mark it as safe.
The new email solution has not only improved every reader’s delivery experience, but it also features a fresh, new format that is easy to read, especially on mobile devices.
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com.