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Digitalisation of banking creates new risks, says global watchdog
By Jerry
LONDON, May 16 (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, opens new tab 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.
Source: REUTER
