medium · Frm Part 2 Operational Risk
A Chief Risk Officer (CRO) observes that 12 regional banks have all outsourced their core banking systems to the same 'Bank-in-a-Box' fintech provider.
From a 'Macroprudential' perspective, what is the primary concern?
- The fintech provider will become too profitable and will eventually buy the banks.
- The 12 banks will be able to collude on interest rates more easily.
- A single operational failure at the fintech provider could trigger a simultaneous, correlated failure of 12 banks, creating systemic instability.
- The banks will all have the same Business Indicator (BI) for their SMA calculation.
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