BIS Report: Big Tech in Insurance Poses Financial Stability Risks
The BIS Financial Stability Institute (FSI) released a report today highlighting the financial stability risks associated with big tech’s entry into insurance, noting that a big tech specific regulatory approach may be warranted. The report finds big tech has a significant footprint in the insurance industry as a service provider but its activities as risk carriers or intermediaries are limited. Thus, financial stability concerns stem from the concentration of technology services and linkages between financial institutions and commercial activities.
Fed Study: Fintech Partnerships Arbitrage National-Bank Preemption Power
A new study by Federal Reserve staff finds that strategic bank-fintech partnerships heavily and profitably target near- and low-prime consumers in states with restrictive interest rate ceilings. Thus, fintech partnerships – termed “rent-a-bank” arrangements by critics – in fact arbitrage national-bank preemption powers in states with strict usury ceilings. This is said to be due in large part to mainstream-bank and non-fintech aversion to higher-risk customers at lower interest rates.