Odd Lots
The OCC’s Michael Hsu on the Big Risks Facing Banking Businesses Right Now
Nov 9, 2023
Michael Hsu, the Acting Comptroller of the OCC, brings his extensive expertise to discuss the recent collapse of Silicon Valley Bank and Silvergate Bank. He delves into the challenges posed by new technologies like crypto and banking-as-a-service, highlighting significant regulatory concerns. Hsu emphasizes the importance of adapting regulations to ensure the safety and accountability of banking partnerships. The conversation also tackles the future of lending and the balance between centralized and community-focused banking in a rapidly evolving landscape.
35:55
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Quick takeaways
- Banks outsourcing functions like payments to third-party vendors presents new problems, risks, and opportunities that require safe and fair due diligence in managing third-party relationships.
- Tokenization in the banking system, focusing on improving settlement processes by collapsing messaging and settlement into a single process, can reduce frictions and costs associated with multiple handoffs and risk transformations.
Deep dives
The risks and opportunities of banking and technology intersection
The podcast episode features a conversation with Michael Sue, the acting comptroller of the currency, who discusses the intersection between banking and technology. He highlights the trend of banks outsourcing functions like payments to third-party vendors and the new problems, risks, and opportunities this presents. Sue emphasizes the importance of ensuring that these outsourcing arrangements are safe, sound, and fair, and that banks do their due diligence in managing the risks associated with third-party relationships.
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