Fintechs and large technology companies should receive greater focus from regulators and are at risk of triggering the next financial crisis, according to Michael Hsu, Acting Comptroller of the Currency in the US.
Speaking at a conference in New York last week, Hsu warned of the growing trend of banks partnering with fintechs and other technology firms in order to meet demands for a more streamlined banking experience. This, he argued, is creating complexity in the finance sector which, if left unchecked, could lead to “a severe problem, or even a crisis.”
“I worry increasingly about the ‘unknowns’ and am concerned that the less familiar risks of this digital transition are unlabeled and thus unseen. As we learned from the 2008 financial crisis, risks that are unseen have a tendency to grow and later to be the source of nasty surprises,” said Hsu.
Hsu’s comments mirrored those of Gene Ludwig, a former Comptroller of the Currency, who also spoke at the event. He said “the non-banking industry is getting away with murder” and added that challenger banks “will get us into the next financial crisis if we don’t do something about it.”