Find out which banks are offering the best CD rates right now. If you’re looking for a secure place to store your savings, a certificate of deposit (CD) may be a great choice. These accounts often provide higher interest rates than traditional checking and savings accounts. However, CD rates can vary widely.
Learn more about where CD rates stand today and how to find the best rates available.
CD rates are relatively high compared to historical averages. That said, CD rates have been on the decline since last year when the Federal Reserve began cutting its target rate. The good news is that several financial institutions offer competitive rates of 4% APY and up, particularly online banks.
Today, the highest CD rate is 4% APY. This rate is offered by Marcus by Goldman Sachs on its 1-year CD.
Here is a look at some of the best CD rates available today from our verified partners:
The Federal Reserve began decreasing the federal funds rate in light of slowing inflation and an overall improved economic outlook. It cut its target rate three times in late 2024 by a total of one percentage point.
In December, the Fed announced its third rate cut of 2025 and additional cuts could be on the horizon in 2026. However, it’s uncertain when that will happen and how many cuts the Fed plans to make.
The federal funds rate doesn’t directly impact deposit interest rates, though they are correlated. When the Fed lowers rates, financial institutions typically follow suit (and vice versa). So now that the Fed has lowered its rate, CD rates are beginning to fall again. That’s why now may be a good time to put your money in a CD and lock in today’s best rates.
The process for opening a CD account varies by financial institution. However, there are a few general steps you can expect to follow:
Research CD rates: One of the most important factors to consider when opening a CD is whether the account provides a competitive rate. You can easily compare CD rates online to find the best offers.
Choose an account that meets your needs: While a CD’s interest rate is a key consideration, it shouldn’t be the only one. You should also evaluate the CD’s term length, minimum opening deposit requirements, and fees to ensure a particular account fits your financial needs and goals. For example, you want to avoid choosing a CD term that’s too long, otherwise you’ll be subject to an early withdrawal penalty if you need to pull out your funds before the CD matures.
Get your documents ready: When opening a bank account, you will need to provide a few pieces of information, including your Social Security number, address, and driver’s license or passport number. Having these documents on hand will help streamline the application process.
Complete the application: These days, many financial institutions allow you to apply for an account online, though you might have to visit the branch in some cases. Either way, the application for a new CD should only take a few minutes to complete. And in many cases, you’ll get your approval decision instantly.
Fund the account: Once your CD application is approved, it’s time to fund the account. This can usually be done by transferring money from another account or mailing a check.
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.
You may think that credit cards are the payment method most targeted by financial fraudsters, but that’s not true. It’s, in fact, debit cards that fraudsters pursue most — and the number of cases involving them keeps increasing, according to a Federal Reserve survey of financial institutions (1). And the reasons why this may leave you more vulnerable to financial loss may also surprise you.
Prediction Market powered by
When you think of debit card scams, you might imagine people having their debit cards physically stolen or their card numbers and PINs skimmed. But there are other debit card scams on the rise that are even more complex. And, as with other scams, having information on how they work may mean the difference between keeping your finances intact and becoming the next fraud victim.
As the Detroit Free Press recently reported, new debit card scams are popping up and gaining momentum (2). One of the most bizarre ones starts with banking customers being warned that there’s a problem with their account, which is a common theme for financial scams.
Next, victims are told to destroy their debit cards but leave the chip on the front of the card intact for security purposes. The scammers then steal the chips by sending a “bank representative” out to pick up the destroyed cards with the chips intact and use social engineering to get the PIN numbers needed to use the cards. With the chip and the PIN, they can then steal funds from the victim’s bank account.
Of course, debit card fraud isn’t the only thing consumers have to worry about. Check fraud has also been on the rise, increasing 10% in 2024 from the prior year, the Federal Reserve survey also found.
The Independent Community Bankers of America has been working with the U.S. Postal Inspection Service to educate customers on check fraud via handouts at different banking locations.
Financial fraud is a problem in general, although, as a consumer, you may be at risk of greater losses if your debit card or checking account is targeted.
Under the Fair Credit Billing Act, consumers are limited to $50 in losses for fraudulent credit card transactions that are reported within 60 days (3). However, most credit cards offer full protection, meaning if your card is stolen or used by a criminal, you probably won’t lose a dime.
Debit cards don’t typically offer the same protection. When your debit card is stolen or accessed by a criminal, the money comes out of your account immediately.
If you report the fraud within two business days, you’re limited to $50 in losses. If you report the fraud after two days and within 60 days, you’re limited to $500 in losses — not an insignificant amount. Worse yet, if you report the fraud after 60 days, you could lose the entire sum that was stolen from you (4).
With checks, timeframes vary. The law says consumers have a year to report check fraud, but there is some leeway. For example, many banks require notification within 30 days, while others expect to be alerted within 14 days after the bank statement was sent out (5).
As a consumer, it’s important to take steps to protect yourself against debit card and check fraud. That includes knowing about the latest scams, including the one mentioned above.
But that doesn’t mean a criminal won’t try to steal your money another way. Perhaps they could steal a replacement debit card from you in the mail or steal checks you’ve written, altering the payee and cashing them.
One option you could look at for protection is to install a mailbox lock where the incoming mail slot remains accessible while the storage part remains locked to anyone who doesn’t have the key. That could prevent a criminal from getting into your mail while allowing a mail carrier to deliver it.
You can also install a security camera outside your home that covers the area of your mailbox. However, this may only offer limited benefits. If a criminal is going to steal your mail, chances are they’re going to wear enough gear to mask their identity.
For debit cards, other fraud prevention methods include always knowing where your card is, covering the keypad when you enter your PIN, and, when buying things online, making sure you shop on a legitimate, secure site while avoiding public WiFi networks.
In addition, look out for loose components on debit card readers at merchants. That could be an indication that a machine has been tampered with and a skimmer has been installed.
Other tips include monitoring your bank account regularly to check for fraudulent transactions and never responding to an unsolicited call, email or text that appears to be from your bank. If you have a concern, call your bank directly or visit a local branch.
Also, never give out your account or PIN over the phone. The same goes for your Social Security number (or other personal sensitive information as a general rule). Having this information could make it easy for a criminal to steal money from your account, and in some cases, steal your identity.
When it comes to checks, fraud prevention methods include writing checks with permanent markers or having them sent electronically from your bank. With the latter, there’s a record with your bank of the intended payee, so it may be easier to prove that fraud has occurred.
It’s also a good idea to bring checks to a post office and have them mailed out directly rather than leaving them in your mailbox to be picked up by a mail carrier. Delivering checks in person is another secure option.
Online scams are on the rise, with the FBI reporting that in 2024, Americans were scammed out of $16 billion by online fraudsters, a 33% increase over 2023 (6). The same year, the FTC reported that the dollar amount for losses from online scams was projected to grow.
To protect yourself and your loved ones from these online scammers, consider using a scam alert service like Aura.
Aura’s online scam tracker uses AI monitoring to look for unusual transactions, sending alerts for any suspicious or significant activity within minutes. Their U.S.-based fraud experts are available 24/7 to ensure you can find accurate information and resolve the situation quickly.
Aura also offers credit monitoring, identity theft protection and parental controls so you can ensure your children don’t fall prey to these fraudsters. Plus, Aura delivers fraud alerts up to 250 times faster than other services of this kind.
Sign up today to enjoy this extra layer of security when shopping online.
Ultimately, prevention is your best defense, so be proactive in learning about the latest safety measures and how scammers try to circumvent them.
Federal Reserve (1); USA Today/Detroit Free Press (2); Cornell Law School Legal Information Institute (3); Michigan Consumer Protection (4); Time (5); FBI (6)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
As the days grow shorter and autumn settles in, it’s a good time to shine a light on a topic that can feel mysterious: your credit score. For many, credit can feel confusing or even intimidating, but understanding how it works and why it matters can be an important step toward strengthening your financial health journey.
How Your Credit Score Impacts Your Financial Journey
Your credit score is a three-digit number used by lenders, landlords, insurance companies, mobile phone providers, and financial institutions to assess your reliability. A higher score can help you qualify for lower interest rates and better loan terms, saving you money in interest and making it easier to achieve major financial goals such as buying a home or car.
Establishing good credit means building a record of responsible usage. Using your credit card and paying your bill on time demonstrates financial responsibility to lenders. On the other hand, missing payment deadlines or not meeting the minimum amount due can negatively impact your score.
Understanding the Factors Behind Your Credit Score
Credit scores typically range from 300 to 850. The better your score, the more options you may have with lenders. Here’s what usually influences your score:
Payment History: Consistently paying bills on time has a positive impact, while late or missed payments can lower your score.
Credit Utilization: Using a smaller portion of your total available credit is better for your score; high balances relative to your total credit limits can be a negative factor.
Total Debt: Lower overall debt is viewed more favorably, while carrying high debt can reduce your score.
Types of Credit Accounts: Having a mix of credit accounts, such as credit cards, auto loans, and mortgages, can strengthen your score.
Length of Credit History: A longer track record of responsible credit use contributes positively to your score.
Recent Credit Applications: Applying for new credit can temporarily lower your score.
Credit Inquiries. Soft inquiries, like checking your own credit or receiving pre-approved offers, don’t affect your score. Hard inquiries, such as applying for a loan or credit card, may lower your score slightly, but the impact fades over time and drops off your report after two years.
If your credit score is on the lower end, don’t worry—there are steps you can take to help improve it.
Credit Smart Habits
Pay your bills on time. Payment history is an important factor when it comes to calculating your credit score. If you struggle with meeting payment deadlines, consider setting reminders or enrolling in autopay.
Pay down your debt. Your credit utilization—meaning the size of your card balance—is the second biggest factor in most credit scoring models. Create a plan to pay down high-interest debt first.
Monitor your credit with Chase Credit Journey®. Regularly checking your credit report can help you spot areas of improvement and fix errors. Chase Credit Journey is a free tool that lets you monitor your score without impacting it, and provides alerts if your personal information is exposed in a data breach. It’s free for everyone, no Chase account required.
Turning Credit Concerns into Financial Wins
Building credit doesn’t have to be spooky and mysterious. With patience and smart financial habits, you can improve your score and unlock financial opportunities. This fall, take steps to understand and strengthen your credit.
A growing number of mainland Chinese financial institutions and international companies have shown interest in establishing regional headquarters in Hong Kong to tap into increasing business opportunities across the region, according to the head of Citigroup‘s local unit.
Aveline San Pau-len, Citi Hong Kong CEO and head of banking, said many mainland banks and international financial institutions would like Citigroup to help set up their headquarters in the city to serve clients who wanted to expand globally.
“Mainland lenders and Citigroup Hong Kong are not competitors; [rather] we are partners,” San said in a recent exclusive interview with the Post. “We are the bankers of these mainland banks and financial institutions, supporting their business expansion plans into Hong Kong and overseas markets.”
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
She said Citigroup “has a physical presence in 94 markets” and that many of its “banking and corporate clients would like us to help them go global, as we have the networks and talent to serve them”.
Many international companies from the US and other regions favour Hong Kong as a gateway to access mainland China and the broader Asian market, according to Citi Hong Kong CEO Aveline San. Photo: Sun Yeung alt=Many international companies from the US and other regions favour Hong Kong as a gateway to access mainland China and the broader Asian market, according to Citi Hong Kong CEO Aveline San. Photo: Sun Yeung>
As an international financial centre, Hong Kong was an ideal springboard for many mainland financial institutions, fintechstart-ups and various companies to expand into other markets, according to San.
Attracting more mainland and international financial institutions to set up regional headquarters in Hong Kong was one of the key measures unveiled by Chief Executive John Lee Ka-chiu in his policy address last month.
Currently, 15 of the 29 globally important banks have regional headquarters in the city, according to the Hong Kong Monetary Authority.
The Hong Kong government had introduced many measures, like tax benefits, to support mainland firms in setting up corporate treasury centres in the city. Active capital markets in the city also allowed these companies to raise funds through shares or bonds, San said.
Geopolitical tension in recent years has led many international firms to diversify their supply chains, production lines and markets, according to Tom Chan Pak-lam, the permanent honorary president of the Institute of Securities Dealers, an industry body. “Hong Kong is a safe haven for these companies to expand into mainland China or other Asian markets,” Chan said.
Against that backdrop, Citigroup’s Hong Kong corporate clients seeking to expand into Latin America or other Asian markets could leverage the group’s units in those regions, as they possessed the local knowledge and networks needed to support their growth, San said.
Many international companies from the US and other regions also favoured Hong Kong as a gateway to access the mainland and the broader Asian market, she added.
Aveline San, Citi Hong Kong CEO and head of banking. Photo: Edmond So alt=Aveline San, Citi Hong Kong CEO and head of banking. Photo: Edmond So>
After these companies set up their regional headquarters in Hong Kong, San pointed out that the next step would be for their owners to capitalise on the city’s wealth management expertise.
“Instead of investing in a single asset class or market, our clients are increasingly looking for international diversification,” she said.
Income earned from the Hong Kong units of mainland firms could be invested internationally through capital market platforms in Hong Kong, she said, noting that the city had a wide range of stocks, bonds and foreign exchange products.
“The many measures introduced by the Hong Kong government in recent years to attract family offices to set up here, alongside the many measures to promote new listings and wealth management services, [have made] the city more attractive to these wealthy international and mainland clients,” she said.
Family offices are entities established by affluent families to manage their succession plans, investments and charitable endeavours. Since 2023, the government has introduced tax benefits, as well as an investment migration scheme, to attract wealthy families to set up their offices in the city.
The active stock and bond markets have also attracted wealthy clients to invest here, San said. The average daily trading volume of the stock market jumped 132 per cent year on year to HK$248.3 billion (US$31.9 billion) in the first eight months of 2025.
Some 66 companies had raised US$23.27 billion through new listings on the exchange’s main board in the first nine months of this year, according to data from the London Stock Exchange Group. The Hong Kong stock exchange is on course to regain the initial public offering crown this year, a title it last held in 2019 before social unrest and the pandemic took a toll on the market.
The challenge ahead would be in developing and recruiting talent, according to San.
“The government has done a lot on education, but there is always more to do to train local talent – in areas such as green finance, fintech, digital assets and artificial intelligence – to serve these companies and banks,” she said. “We see opportunities for Hong Kong to lead the way in fostering an AI-ready workforce.”
The Financial Times recently reported that banks are pushing to change new U.S. stablecoin rules over the uncertainty of trillions of dollars’ worth of outflows.
Banks have also taken note of the GENIUS Act, which prohibits issuers from paying yield to customers using stablecoins. However, crypto exchanges will continue to indirectly offer interest and rewards to stablecoin holders, creating competition between banks and exchanges that provide access to stablecoins.
Charles Wayn, co-founder of Web3 growth platform Galxe, told Cryptonews that he believes this is a main concern for banks.
“Users deposit their stablecoins onto a crypto exchange and earn a superior yield to what is available on traditional bank accounts. The GENIUS Act further makes this a more compelling offering than it was previously because of the added consumer protections and backing guarantees,” Wayn said.
As a result, many banks are now fearful that an uneven playing field exists between traditional finance and offerings by crypto exchanges.
On the other hand, Wayn pointed out that banks still possess some advantages over crypto exchanges when it comes to stablecoins.
“Crypto exchanges don’t offer the same protection as FDIC insurance, so banks still have an advantage in terms of public perception,” he said.
Adding to this, James Smith, co-founder of digital asset platform Elliptic, told Cryptonews that in jurisdictions like the U.S., regulations are emerging that require stablecoin issuers to hold reserves with federally regulated banks.
As such, Smith noted this creates a new client segment for banks. However, this also results in a compliance obligation, since those banks must conduct due diligence on issuers and tokens.
Given the pros and cons associated with stablecoins and traditional finance, industry experts believe that banks should embrace these digital assets rather than fear them.
“It’s become clear that banks can’t afford to sit on the sidelines,” Smith said. “Stablecoins are here to stay, and banks should, at a minimum, be prepared to provide custody, payments, or reserve services.”
In order to advance this concept, Smith explained that Elliptic has launched the first of its kind “Stablecoin Risk Management Suite.” This is designed specifically for banks and financial institutions looking to integrate stablecoins.
Smith explained that the risk management platform was developed in partnership with Global Systemically Important Banks (G-SIBs) to meet high regulatory standards. This will also provide banks with confidence to integrate stablecoins into their operations without adding friction.
“The first product is called ‘Issuer Due Diligence,’ which allows G-SIB banks to perform address-level analysis, monitor issuer wallets over time, and detect illicit activity with the same precision they expect when onboarding any counterparty,” Smith noted.
Smith added that while some banks—like JPMorgan Chase—may already issue their own stablecoin offerings, many others may focus on servicing the reserves of established issuers. “This will ultimately depend on each bank’s strategy and regulatory realities,” he said.
While Elliptic’s offering may appeal to some, other financial institutions may wish to take a hybrid approach.
For instance, Wayn noted that while JP Morgan’s venture into stablecoins shows that launching permissioned deposit tokens for large institutional clients can be a successful strategy for banks, retail adoption also needs to be considered.
“For retail and cross-platform commerce, tried-and-tested public stablecoins are the best way forward, because they already have the scale, interoperability, and brand recognition required to support this mainstream push,” Wayn said.
Therefore, a stablecoin strategy that focuses on both institutions and retail customers may be best for banks moving forward.
In the meantime, Wayn remarked that banks concerned about losing deposits to higher-yielding stablecoin products should also focus on improving their own offerings.
“This could include offering higher yields on their savings accounts, better perks like discounts, cashback offers or points, sign-up bonuses, and loyalty programs to attract new customers and retain existing ones. In short, it’s time for banks to try some innovative customer engagement strategies.”
While it’s becoming clear that banks can’t afford to ignore stablecoin innovation, a number of challenges remain—even with current integration solutions.
Dave Hendricks, CEO and founder of RWA tokenization platform Vertalo, told Cryptonews that the issuance of stablecoins presents banks with a major dilemma.
“Banks need to think about whether or not they should build their own tech to issue stablecoins, or partner with existing stablecoin companies like Circle,” Hendricks said. “Because bank-issued stablecoins, by law, cannot pay interest to depositors, banks need to decide whether they want to incur CapEx to offer an unattractive retail product, or just create something to facilitate interbank payments.”
Given this, Hendricks pointed out that it’s possible many banks won’t be first-movers into the stablecoin market as they calculate the cost of building technology to issue their own stablecoins versus the lower cost and risk of partnering.
“Personally, I hope that banks that choose to enter this arena don’t make the rookie mistake of trying to build this internally, and instead work with existing technology providers to accelerate speed-to-market while reducing CapEx, risk, and distraction from traditional operations,” Hendricks said.
Hendricks added that while banks and traditional financial institutions may be forced to adopt stablecoins to stay relevant, he believes that many of these institutions will not have the capital or technology to effectively participate in this movement.
Wayn further remarked that for banks to issue their own stablecoins, the regulatory compliance costs would be much higher than for specialized issuers.
“That’s not to say they won’t—many are considering it and JPMorgan is already ahead of the curve—but they will remain niche products designed for their high-net-worth customers, rather than mainstream retail applications.”
While no major banks have fully launched their own stablecoin offerings, many U.S. banks, including Bank of America, JPMorgan Chase, and Citigroup, are exploring stablecoin integrations.
Bank of America shares have fallen 14% this year.Spencer Platt/Getty Images
Big banks are sitting on $650 billion of unrealized losses, Moody’s has estimated.
It’s a sign even Wall Street’s best-known names are feeling the heat from the Treasury-market rout.
Crashing bond prices sank Silicon Valley Bank earlier this year, and there may be more chaos to come.
Crashing bond prices sank Silicon Valley Bank in March — and there’s reason to believe that what triggered the California lender’s collapse may be haunting Wall Street again.
The brutal Treasury-market meltdown has hit some of the largest financial institutions hard, dragging down the share prices of big names such as Bank of America and fueling fears that the turmoil triggered by SVB’s bankruptcy may not be over just yet.
Here’s everything you need to know about unrealized losses, including why they’re dragging on bank stocks and whether they could trigger another financial crisis.
Unrealized losses
Treasury bonds — debt instruments the government issues to fund its spending — have been on a nightmarish run since the onset of the pandemic, with investors fretting about rising interest rates and the long-term viability of the US’s massive deficit.
As a result of that sell-off, some of the US’s biggest banks are now sitting on unrealized, or “paper,” losses worth hundreds of billions of dollars. That means the value of their bond holdings has plunged, but they’ve chosen to hold on rather than offload their investments.
Moody’s estimated last month that US financial institutions had racked up $650 billion worth of paper losses on their portfolios by September 30 — up 15% from June 30. The ratings agency’s data still doesn’t account for a hellish October where the longer-term collapse in bond prices spiraled into one of the worst routs in market history.
These “losses” are not the same as debt, however, which describes actual borrowings that need to be repaid.
Bank of America is the big lender worst affected by the crash in bond prices, having disclosed a potential $130 billion hole in its balance sheet last month.
The other “Big Four” banks — Citigroup, JPMorgan Chase, and Wells Fargo — have also racked up unrealized losses in the tens of billions, according to their second- and third-quarter earnings reports.
Another SVB-style crisis?
Silicon Valley Bank failed in March after disclosing a $1.8 billion loss on its own bond portfolio, triggering a run on deposits. Similarly, big banks’ huge unrealized losses are also sparking concern among Wall Street doom-mongers.
“‘Higher for longer’ is absurd baloney,” the market vet Larry McDonald said in a post on X Sunday, referring to the Fed signaling it would hold interest rates at about their current level well into 2024 in a bid to kill off inflation. “A 6% + Fed funds and Bank of America is near insolvency.”
It’s important to remember that BofA’s $130 billion losses are still unrealized. Unlike SVB, it isn’t officially in the red yet because it has not sold its bond holdings.
The bank’s chief financial officer, Alastair Borthwick, shrugged off the market’s worries on last month’s earnings call, pointing out that most of the bank’s fixed-income portfolio was low-risk government bonds it planned to hold until the debt expires.
“All of these are unrealized losses are on government-guaranteed securities,” he told reporters. “Because we’re holding them to maturity, we will anticipate that we’ll have zero losses over time.”
There’s still a possibility that spooked BofA customers will pull their money en masse, as they did with SVB — but that hasn’t happened. In fact, deposits are up after registering about 200,000 new accounts in the third quarter.
Some analysts also believe the worst of the Treasury-market rout is now over, with the Federal Reserve starting to signal that its tightening campaign is nearly done. Ten-year yields have softened in recent weeks, falling from 5% to 4.6% as of Tuesday.
Banks under pressure
That doesn’t mean the Big Four banks can afford to just dismiss the bond rout.
In a paper published earlier this year, researchers for the Kansas City Fed concluded that paper losses could still drag down a bank’s share price: “Unrealized losses can increase equity costs as investors’ perceptions of financial health deteriorate.”
That’s been happening this year, with three of the big four banks’ stocks sliding. Predictably, Bank of America has been worst affected, with its stock down 24% over the past year and 14% year-to-date.
“Worries over unrealized losses on sovereign bond holdings are also weighing on the US lenders, to again reflect concerns over rising interest rates and whether the US Federal Reserve will ultimately tighten policy by too much for too long,” AJ Bell’s Russ Mould said in a note last week.
Unrealized losses may not be about to trigger another financial crisis — but as long as bank stocks are down, they’ll remain a concern for Wall Street’s biggest names.
The implementation of the ISO20022 offers a great opportunity to transform and modernise banking operations and payments.
The growth in Payments
Payments are the lifeblood of the economy, facilitating transactions for goods and services and the greater flexibility and speed have greatly expanded the choices.
In Switzerland, besides cash, debit cards were the preferred payment method between from 2017 and 2020 (22% to 32% of payments by volume and 28% to 34% by value). Whereas volume and value has remained on a similar level since then, contactless payments have increased between 2020 and 2022 (from 13% to 19% in value).
Additionally, a substantial growth in mobile payment transactions have been observed between 2020 and 2022 (4% to 11% by volume and 4% to 8% by value).
Source: Swiss National Bank
Insights of our recent Payments survey
In our recent payments survey of more than 40 banks in Switzerland, 45% rate payments as a strategic driver, and 55% as a need-to-have commodity.
Furthermore, 82% of the banks consider that payments will be even more important in five years than it is today, and only 18% believe that they will be less important.
Payments are a key connector between a bank and its customers. Depending on a bank’s positioning and product offering, over 50% of customer interactions involve payments.
Source: Deloitte payments survey 2023
Payment regulation
ISO20022 and instant payments
The implementation of instant payments and adaption to ISO20022 is mandatory and follows a clear roadmap outlined by SIX (mandated by SNB) with a product migration path.
Together with the financial institutions, SIX is initiating the technical rollout of ISO20022, followed by the technical readiness for SIC5 by the end of 2023. The largest Swiss banks must comply by the end of 2024, with a capability of processing instant payments (receiving), and the remaining banks must comply by 2026 at the latest.
Open banking
Open banking − which permits access to bank customer interfaces for third-party providers − is not yet mandatory for banks and other financial institutions in Switzerland. However, Open banking was made mandatory for banks and other financial institutions in the EU with the regulation Payment Services Directive 2 (PSD2) regulation.
On 28 June 2023, the European Commission published draft legislation, PSD3, which aims to:
Combat payment fraud by allowing financial institutions and payment service providers to share fraud-related information with each other
Strengthen consumers’ rights, improving transparency on their account statements
Enabling non-bank payment service providers to access all EU payment systems while preserving their right to a bank account
Improve open banking functionality and customer control over payment data, allowing new and innovative services to enter the market.
In Switzerland, the Federal Council has included open banking in its ‘digital agenda’ for 2024. Therefore, it can be assumed that this will trigger transformation activities for banks and financial institutions on the regulatory side.
Implications
Payments are undergoing a profound transformation, based on/initiated by changes in customer behaviour, technology, commercial/business models, partnerships/fintech’s as well as in regulation.
It will therefore not be sufficient in the long term simply to implement the new regulatory requirements for payments.
Banks and other financial institutions should now deal with the challenge of payments transformation holistically and set the right course.
Banks and financial institutions will be confronted with the following consequences if they do not modernise and upgrade their payment systems:
Lack of innovation, less customer proximity and resulting weaknesses in the market offering
Ever-increasing process-related disadvantages compared to other banks and competitors, due to costs not being reduced and processing times not being accelerated
the consequences of regulatory non-compliance.
Payments transformation
ISO20022, combined with the advent of instant payments, holds immense potential for financial institutions in Switzerland and Liechtenstein. This combination offers many opportunities for early adopters, enabling them to enhance their operations, streamline processes, and stay ahead of the curve.
Opportunities and advantages from early adoption
Enhanced operational efficiency: ISO20022 introduces a standardised data format that allows for seamless inter-communication and interoperability between financial institutions. By adopting ISO20022 early, Swiss and Liechtenstein financial institutions can leverage this standardised format to simplify and automate processes such as payment initiation, reconciliation, and reporting. This streamlining of operations reduces manual effort and the risk of errors and improves overall efficiency.
Better customer experience: Instant payments, enabled by ISO20022, revolutionise the speed and convenience of transactions. With real-time payment capabilities, financial institutions can offer their customers around-the-clock near-instantaneous and frictionless fund transfers. This enhanced customer experience should foster customer loyalty and satisfaction and help to attract new clients by differentiating early adopters from their competitors.
Competitive edge: By embracing ISO20022 and instant payments at an early stage, financial institutions can gain a significant competitive advantage. They can position themselves as leaders in the industry by providing cutting-edge payment solutions that cater to the evolving needs and expectations of customers. This proactive approach should also help to attract business partners who seeking collaboration with innovative financial institutions.
Modernising applications and processes
Seamless integration: ISO20022 is a catalyst for modernising existing applications and legacy systems. Financial institutions can integrate ISO20022 messages seamlessly into their existing infrastructure, enable smoother data exchange between various systems, and pave the way for improved analytics, reporting, and compliance monitoring.
Enhanced data insights: ISO20022 supports the transmission of enriched data, including detailed payment information and contextual data. Financial institutions can use this additional information to obtain valuable insights into customer behaviour, spending patterns, and markets trends, enabling them to offer personalised services, develop targeted marketing strategies, and make data-driven business decisions.
Fostering innovation
Open banking opportunities: ISO20022, combined with instant payments, lays the foundation for open banking in Switzerland and Liechtenstein. It enables secure and standardised data exchange between financial institutions and third-party providers, fostering collaboration and innovation. By embracing ISO20022, financial institutions can explore new revenue streams, offer value-added services, and create innovative partnerships with fintech firms, whilst ensuring the security and privacy of customer data.
Product and service innovation: ISO20022’s rich data capabilities enable financial institutions to develop innovative products and services that go beyond traditional payment offerings. By analysing customer behaviour and preferences, they can identify opportunities for creating tailored financial solutions, such as real-time budgeting tools, personalised savings plans, and AI-driven investment recommendations. These innovations will not only enhance customer engagement but will also generate new revenue streams.
Conclusion
ISO20022 and instant payments present Swiss and Liechtenstein financial institutions with unprecedented opportunities to modernise their applications, streamline their processes, and innovate. Early adoption of ISO20022 will enable them to gain a competitive edge, enhance operational efficiency, and deliver an exceptional customer experience. By leveraging ISO20022’s capabilities, financial institutions can transform their operations, unlock valuable data insights, and drive product and service innovation.
Embracing ISO20022 is not only a strategic move. It is also a crucial step in future-proofing the payments landscape.
Finally, payments will be a challenge for banks and financial institutions to develop process excellence and to meet regulatory requirements. Payments will become a key differentiator in the management of client expectations and customer centricity.
Cyrill Kiefer, Partner, Banking Consulting Lead
Cyrill is Partner in the Banking Transformation Practice. He has successfully led various «end-to-end» transformation projects from strategy to go-live in the area of trading, regulatory, sales excellence, digitalisation and organisational change management. He has more than 18 years of consulting experience in serving retail and private banks as well as market operators. Cyrill focuses on optimising the interaction between banks and clients by using digital solutions and develops agile front-end solutions for the Fintech industry.
Roger Kuhn, Partner, Consulting Business Operations Lead
Roger is the Lead Partner of Deloitte’s Business Operations practice in Switzerland with over 20 years of experience advising clients on large-scale business transformations and technology implementations. He collaborates with our clients across the spectrum of their end-to-end journeys, focusing on the transformation, modernisation, and optimisation of their business operations systems.
Roger’s academic background lies in economics and business administration at the University of St. Gallen, with a specialization in financial accounting and reporting. In his previous roles, Roger was responsible for overseeing complex global finance transformation programs for major Financial Service organisations.
David is Deloitte Switzerland’s Payments Lead and a Director in the Business Operations Consulting practice in Zurich, with global experience gained in Consultancy and the Banking industry. He has vast experience and a macro view across retail and banking payments, payments processing, financial service products, consumer, payments costs, regulations and systems as well as detailed knowledge of key processes in Acquiring, PSP and omni-channel/e-commerce payments.
He has advised large clients through impactful payments transformation and digital payments projects in Switzerland and Europe.
Michael is part of Deloitte’s Business Operations practice and a member of the Payments offering. He has over 7 years’ experience in the banking area with focus on banking operations and transformation.
He has gained diverse experiences in financial services from the inside out, through advising, auditing, and working as an employee. From client facing role to IT transformation and executing the multi-year plan for the Chief Operating Officer and regular meetings with Senior Management.
Michael is an experienced project manager and led transformation projects, ranging from IT implementation projects to adapt the ISO20022 standard to projects with focus on B2B cross-border payments and ESG initiatives among others.
Financial Services Institutions Bureau (FSIB), a single autonomous professional body, has recommended the names of as many as 16 candidates to form part of the Panel for FY24 from which executive directors’ vacancies will be filled in public sector banks (PSBs).
Between July 1-15, FSIB had interfaced with as many as 72 candidates from various PSBs.
The names recommended in the order of merit are Sanjay Rudra, Lal Singh, Bindu Prasad Mahapatra, Shiv Bajrang Singh, Ravi Mehra, Rajiv Mishra, Balwinder Kumar, Brijesh Kumar Singh, Rohit Rishi, Mahendra Dohare, S.K. Majumdar, Dhanraj T, Vijay Kumar Nivrutti Kamble, Pankaj Dwivedi, Mukul N Dandge, and Amit Kumar Srivastava.
Recommendation for the positions of Executive Directors in Public Sector Banks for Panel Year 2023-24. pic.twitter.com/B60MxdzO7R
— Financial Services Institutions Bureau (@FSI_Bureau) July 15, 2023
It may be recalled that FSIB was set up as a single autonomous professional body tasked to search and recommend high-calibre persons for appointment as Wholetime directors (WTDs) and non-executive Chairpersons in public sector banks, public sector insurers, and financial institutions. FSIB had subsumed the Banks Board Bureau, which now ceases to exist.
Annual inspections by the Reserve Bank of India (RBI) has commenced for banks. With FY23 financials under the scanner, what’s grabbing the regulator’s attention is the loans handed out by banks to non-banking finance companies (NBFCs).
With the share of bank loans to NBFCs as a percentage of loan book increasing to 13-16 per cent for the top 20 players — a jump of 200-250 basis points — the RBI is ascertaining the implication of these loans to the balance sheets of banks from an asset quality perspective.
To put things into context, loans to NBFCs are categories as ‘secured’ by banks as they are often backed by liquid collaterals, including receivables.
However, with the growing proportion of NBFCs, particularly those operating in the non-housing segment such as business loans and personal loans which are often unsecured, there is a debate between banks and the regulator on how these loans should be treated.
If unconvinced by the merits put forth by banks, the regulator may insist that banks take contingent provisioning against loans lent to NBFC borrowers. “The question is whether such a provisioning would be insisted on FY23 financials or banks will get some breather to implement higher provisioning in the ongoing FY24 fiscal,” said a person aware of the matter.
Are loans to NBFCs really secured — that’s the debate doing the rounds, according to highly placed sources.
“For banks, these could be secured loans, but the end-use of these loans goes into building unsecured books. In that case, even if loans to NBFCs are backed by hard collateral, they may not be recoverable in practice. This is the concern for RBI,” said a person aware of the matter.
Bankers say this debate has been ongoing for a while, but the magnitude it has taken in FY23 annual inspection has taken them by surprise. “It’s in early stages of talks and in a quarter or so, the outcome will be known,” said the person.
