OCC flags cybersecurity, UDAAP risks in new report

The Office of the Comptroller of the Currency (OCC) released its semiannual risk report last week, which found that interest rates, cybersecurity, compliance, and loan portfolio performance are among the top risks facing the banking industry.

As the financial services industry adopts new technologies and finds innovative ways to serve consumers, the OCC warned of an increasingly complex operating environment and recommended banks practice appropriate due diligence, change management, and risk management when partnering with fintech companies.

Of note, within compliance risk, the OCC specifically flagged unfair, deceptive, or abusive acts or practices (UDAAP) risk in fintech partnerships.

“For example, some banks are partnering with fintech firms allowing the fintech firm to provide banking services, or to provide opportunities for customers to enter the digital asset market,” the report stated. “These relationships may also increase the risk of unfair or deceptive acts or practices because of the coordination, communication, and disclosure challenges involved in these partnerships, including coordination in managing the customer relationship.”

 

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