The Acting Comptroller of the Currency – a US and bank regulator stated that fintech services and digital banking could spur financial risks and crisis, according to a report by Reuters.
In a recent New York conference, Michael Hsu stated, “I believe Fintech and big techs are having a large impact and warrant much more of our attention.”
He noted the encroachment of FinTech companies into the traditional financial sector, especially through partnerships with banks, as creating more complexity and “de-integration” across the banking sector.
“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 added.
Hsu also noted that 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. Furthermore, he noted that with FinTech valuations falling as financing costs rise, bank partnerships with FinTech are increasing.
That could create IT risks around information security and resilience and also raises customer protection issues, according to Hsu.
