23 May 2018
visit www.ebaday.com

ECB ponders bigger liquidity requirements for 'fintech banks'

22 September 2017  |  11406 views  |  0 European Central Bank

The European Central Bank says that, because they pose unique risks, it may start asking fintech firms seeking banking licenses to hold bigger capital buffers and larger liquidity.

The ECB says that it is seeing an increasing number of license applications from "fintech banks", which it defines as having “a business model in which the production and delivery of banking products and services are based on technology-enabled innovation”.

With this in mind, the central bank has set out draft guides on the licensing process for these entities - which can be new entrants or existing banks which have "evolved" - that take into account the specific risks they pose.

Fintech banks may need greater liquidity levels than normal lenders because they have a volatile customer base, more likely to switch to rival providers. They may also need more capital because they are entering a crowded market and so are likely to employ aggressive pricing strategies and could also need to switch business models.

The draft guide also highlights IT-related risks for fintech banks, arguing that their reliance on technology and outsourcing, including through cloud computing, makes them vulnerable to cyber attacks.

Elsewhere, the ECB stresses that fintech banks must have people with strong technology and technical skills and knowledge on their management teams, suggesting a chief information technology officer be appointed to executive boards.

A consultation on the guide, which you can read in full below, will now run until 2 November.» Download the document now 239.4 kb (Chrome HTML Document)
KeywordsCLOUD

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

ECB and Bank of Japan conclude DLT not ready for RTGS systems

ECB and Bank of Japan conclude DLT not ready for RTGS systems

07 September 2017  |  15251 views  |  0 comments | 11 tweets | 16 linkedin
ECB preps eurozone-wide instant payments service

ECB preps eurozone-wide instant payments service

22 June 2017  |  12226 views  |  0 comments | 20 tweets | 38 linkedin

Related company news

 

Related blogs

Create a blog about this story (membership required)
Visit iliad-solutions.com/Visit http://go.jumio.com/finextraAdvisit www.ebaday.com

Top topics

Most viewed Most shared
PayPal agrees $2.2 billion deal for iZettlePayPal agrees $2.2 billion deal for iZettl...
10080 views comments | 16 tweets | 28 linkedin
BBVA begins global roll-out of unified mobile appBBVA begins global roll-out of unified mob...
8856 views comments | 6 tweets | 5 linkedin
Japanese banks join quantum computing hubJapanese banks join quantum computing hub
7524 views comments | 8 tweets | 5 linkedin
Digital banking transformation creating new systemic risksDigital banking transformation creating ne...
7056 views comments | 17 tweets | 22 linkedin
SEC lures wannabe crypto investors with fake ICO siteSEC lures wannabe crypto investors with fa...
7038 views comments | 7 tweets | 11 linkedin

Featured job

Find your next job