Five kinds of dangers that threaten bank-fintech collaborations

As banks continue to participate in collaborations with fintechs, the dangers along with the advantages of these plans are ending up being clearer. The disaster of FTX and Alameda Research is the most recent example of what can fail when a less-regulated business is connected to the controlled monetary market, a subject that regulators like the Office of the Comptroller of the Currency have actually been sounding alarms about throughout the year.

Banks have actually been progressively coordinating with monetary innovation business to enhance procedures like payments, underwriting and app advancement. Some banks provide banking-as-a-service to fintechs, letting the 3rd parties make the most of banks’ charters and deposit insurance coverage while supplying more active services to customers. 

Comptroller of the Currency Michael Hsu stated in a September speech that bank-fintech collaborations can serve all celebrations included, however folks require to think of numerous due diligence concerns to play it safe. He included shortages in threat management can be “devastating.”

“Much more work remains to be done. My sense is that we are still in the early stages of a significant shift in how banking services are going to be provided in the future,” Hsu stated in September at The Clearing House and Bank Policy Institute’s Annual Conference. “By expanding our aperture, engaging more substantively with nonbank technology firms, and mapping out bank-fintech relationships and risks, we can help ensure that banking remains trusted and safe, sound, and fair as the system evolves.”

Here are a few of the most significant threat aspects of fintech-bank relationships:


A news media journalist always on the go, I've been published in major publications including VICE, The Atlantic, and TIME.

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