Learning Objectives:

  • Identify key regulatory frameworks governing digital banking.

  • Understand the compliance requirements for digital banks.

7.1 Key Regulatory Frameworks

Digital banking operates within a complex regulatory environment [citation:1,2,13]. Key frameworks include:

European Framework:

  • PSD2 (Payment Services Directive 2): Mandates open banking and strong customer authentication [citation:2,13].

  • GDPR (General Data Protection Regulation): Sets rules for data privacy and consumer protection .

  • MiFID II: Regulates investment services and markets .

  • DORA (Digital Operational Resilience Act): Establishes requirements for ICT risk management .

US Framework:

  • Dodd-Frank Act: Established consumer protection and systemic risk oversight.

  • FFIEC Guidelines: Provides guidance on cybersecurity and technology risk management.

  • Volcker Rule: Restricts proprietary trading by banks.

7.2 Key Compliance Areas

Digital banks must comply with requirements across several areas:

  • Data Protection and Privacy: Compliance with GDPR, CCPA, and breach notification requirements .

  • AML/CFT: Transaction monitoring, suspicious activity reporting, and sanctions screening .

  • Consumer Protection: Fair lending, transparency, and dispute resolution.

  • Operational Resilience: Business continuity, disaster recovery, and incident response .

PreviousNext