“A Playbook for Defending Your Deposits”
With deposit competition increasing, keeping existing customers can be more cost-effective than replacing deposits after they leave. This article recommends that banks identify customers whose deposits are most at risk of moving elsewhere, determine which relationships are worth retaining, and account for potential losses in liquidity forecasts and ALCO planning.
“OCC Issues Final Rule on Stablecoin Framework”
The OCC finalized its rule for implementing the GENIUS Act, which takes effect Jan. 18. Stablecoin issuers cannot pay interest or yield directly to customers, including through certain indirect arrangements, but third parties may be able to offer rewards depending on the arrangement. The OCC will review those arrangements on a case-by-case basis.
“FDIC’s Hill Mulls Agentic AI Deposit Impact”
FDIC Chair Travis Hill said regulators are studying how AI agents that move money for customers could affect bank deposits. He also said existing model risk guidance does not adequately address generative and agentic AI, and that the FDIC may seek public input on how to supervise the technology.
Speaking of agentic AI, PNC CEO Bill Demchak said banks “will never” allow AI agents to make transactions without a person involved because of fraud and liability risks. AI agents may help customers manage transactions, he said, but people will remain in control of moving money.
To learn more about using agentic systems for compliance and fraud detection and the risks of giving AI agents real authority, check out our most recent episode of Banking with Interest with Citigroup Chief Legal Officer Brent McIntosh.
“CECL Under Review: Weighing the Costs, Benefits, and Impact”
FASB is reviewing whether CECL’s benefits justify the cost and complexity of complying with the standard. Community banks have raised concerns about compliance costs and swings in loan-loss reserves, which could lead to targeted changes rather than replacing CECL.
“Banks vs. Crypto? Not at the Ballot Box”
Banks and crypto companies remain divided on financial policy but are spending to support some of the same congressional candidates. All seven candidates backed by both industries sit on the House Financial Services or Senate Banking Committees, highlighting their shared effort to influence lawmakers who shape financial policy.
For more on how the midterm elections could affect banks, check out our recent episode of Banking with Interest with Cam Fine, former head of ICBA, and Ed Yingling, former head of ABA.
“Rethink the Trade-offs Between Fraud Prevention and Account Opening Speed”
Fraud checks can drive away good customers if they make opening accounts too slow or difficult. This article suggests banks measure both the fraud they stop and the applicants they lose, while using faster checks when accounts are opened and additional verification when necessary.
“Ramp Seeks OCC Trust Bank Charter for Digital Asset Custody”
Ramp has applied to the OCC for a national trust bank charter to offer investment management and digital-asset custody. The application is part of a broader push by fintech and crypto companies for federal trust charters, a trend community bank groups are challenging in court.
In Other News
AI-assisted research uncovered critical vulnerabilities in software that powers much of the web, economists surveyed by The Wall Street Journal expect elevated bond yields to persist, and Barclays said it’s eliminating 5,000 jobs as it expands its use of AI.
Thanks for reading.