financetom
Business
financetom
/
Business
/
Digitalisation of banking creates new risks, says global watchdog
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
Digitalisation of banking creates new risks, says global watchdog
May 16, 2024 3:25 AM

LONDON (Reuters) - The digitalisation and entry of Big Tech into finance create new vulnerabilities and amplify existing risks in the banking system that may need new rules to mitigate, global banking regulators said in a report on Thursday.

The growth of cloud computing, whereby key banking services are aided by outside tech companies, the rise of AI, use of distributed ledger technology (DLT), and spread of open banking, or external fintechs sharing customer data with banks, create new risks, the Basel Committee of banking regulators said.

"These can include greater strategic and reputational risks, a larger scope of factors that could test banks' operational risk and resilience, and potential system-wide risks due to increased interconnections," it said.

External operators used by banks create "new nodes of channels and interconnections" as they may not be subject to the same level of regulatory standards as lenders, the committee said in its report.

Regulators often compile reports to ascertain facts and scope out a sector to provide a foundation for any new rules.

"Where necessary, it will consider whether additional standards or guidance are needed to mitigate risks and vulnerabilities," the committee said.

The Basel Committee is made up of central bankers and banking regulators from the G20 economies and other countries, whose members commit to applying rules it approves.

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
Ahead of crucial talks, IMF spots Rs 2 trillion breach in Pakistan’s budgetary estimates
Ahead of crucial talks, IMF spots Rs 2 trillion breach in Pakistan’s budgetary estimates
Jan 28, 2023
Pakistan and the International Monetary Fund (IMF) officials are scheduled to kick-start parleys from Tuesday for accomplishing the ninth review under the Extended Fund Facility during which the fiscal slippages and reconciliation of figures will be the major topic of discussion.
After India, China gives financing assurances to Sri Lanka for IMF bailout package
After India, China gives financing assurances to Sri Lanka for IMF bailout package
Jan 22, 2023
China has given debtridden Sri Lanka the financing assurances required by the IMF to unlock a USD 2.9 billion bailout package for the country, days after India strongly backed the island nation's efforts to secure the loan from the global lender to recover from its worstever economic crisis.
WEF founder heaps praises on Prime Minister Narendra Modi as Davos comes to a close
WEF founder heaps praises on Prime Minister Narendra Modi as Davos comes to a close
Jan 20, 2023
"India is promoting a just and equitable growth for all in the world during its G20 presidency, while also making significant progress on the most pressing domestic challenges. India’s G20 presidency comes at a crucial time, Prime Minister Modi’s leadership is critical in this fractured world," World Economic Forum's Founder and Executive Chairman Klaus Schwab said.
Shell considers exiting UK, German, Dutch energy retail businesses
Shell considers exiting UK, German, Dutch energy retail businesses
Jan 26, 2023
Shell injected nearly $1.5 billion in cash and credit into its British energy retail business in 2022 to help it weather huge volatility in power prices that caused the collapse of several rival UK utilities. Shell Energy Retail, its UK business, has 1.4 million customers, while its German business has 110,000 and the Dutch business 15,000.
Copyright 2023-2026 - www.financetom.com All Rights Reserved