US Open Banking May Impact Deposit Outflows, Warns Regulator

Note* - All images used are for editorial and illustrative purposes only and may not originate from the original news provider or associated company.

Subscribe

- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from any location or device.

Media Packs

Expand Your Reach With Our Customized Solutions Empowering Your Campaigns To Maximize Your Reach & Drive Real Results!

– Access the Media Pack Now

– Book a Conference Call

– Leave Message for Us to Get Back

Related stories

Deutsche Bank and Mastercard Join for Open Banking Payments

Deutsche Bank and Mastercard has announce a joint strategic...

AI-Driven Credit Scoring: Bridging the Gap for the Unbanked

This flexibility may even result in banks paying less...

Smart Ways to Grow and Protect Wealth Near Retirement

As retirement approaches, many people shift their focus from...

Smart Ways to Grow and Protect Wealth Near Retirement

As retirement approaches, many people shift their focus from...

The open banking evolution in the US could go on to impact the way regulators supervise the banks since the seamless portability of accounts between financial institutions can lead to more deposit outflows, said a top banking regulator on April 19.

Although the data portability is going to prove to be empowering for the customers, it can also go on to increase the liquidity risk when it comes to retail deposits for banks, according to Michael Hsu, the acting comptroller of the currency.

Open banking is a process in banking as well as other traditional financial institutions that offers customers and third parties’ seamless digital access to their financial information.

Rohit Chopra, who happens to be the Consumer Financial Protection Bureau director, said that his agency anticipates offering a rule in 2023 requiring financial institutions that offer transaction accounts to create secure methods when it comes to data sharing, a move that could help significantly boost the competition as far as the consumer finance industry is concerned.

Although such rules go on to elevate the stickiness element related to retail deposits and also lower the risk of liquidity by encouraging banks to take steps when it comes to retaining customers, the transition warrants strict and careful monitoring, says Hsu.

He added that there is a sense that mobile and online banking may have gone on to facilitate not so common large as well as rapid outflows in terms of wholesale deposits at Silicon Valley and Signature Bank in March this year.

It is well to note that the depositors at SVB went on to withdraw $42 billion in a day as per regulators, who had to shutter the lender shortly. According to Hsu, although it may look like an overstatement to let the bank run on social media and mobile banking’s seamlessness, regulators would be negligent if they were to avoid the impact that they have had on the banking sector.

As per Hsu, bank regulators need to pay much closer attention to how technology and associated practise changes may have a risky impact on banking.

Latest stories

Related stories

Deutsche Bank and Mastercard Join for Open Banking Payments

Deutsche Bank and Mastercard has announce a joint strategic...

AI-Driven Credit Scoring: Bridging the Gap for the Unbanked

This flexibility may even result in banks paying less...

Smart Ways to Grow and Protect Wealth Near Retirement

As retirement approaches, many people shift their focus from...

Smart Ways to Grow and Protect Wealth Near Retirement

As retirement approaches, many people shift their focus from...

Subscribe

- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from any location or device.

Media Packs

Expand Your Reach With Our Customized Solutions Empowering Your Campaigns To Maximize Your Reach & Drive Real Results!

– Access the Media Pack Now

– Book a Conference Call

– Leave Message for Us to Get Back