Bank of Italy Scrutinizes Smaller Banks’ Reliance on Online Deposit Platforms
By Valentina Za
Regulatory Concerns Over Online Deposit Platforms
MILAN, April 29 (Reuters) - Smaller Italian banks have increased reliance on funding they raise abroad through online deposit platforms, the Bank of Italy said on Wednesday, as regulators step up monitoring of the practice.
How Online Deposit Platforms Work
Online deposits allow banks to raise retail deposits digitally, often on a cross‑border basis, by giving savers access to deposit accounts offered by multiple banks through a single interface.
Supervisory Concerns Following Banking Turmoil
Impact of March 2023 Banking Crisis
The March 2023 banking turmoil, where rapid online deposit outflows led to the collapse of Silicon Valley Bank in the United States, has increased supervisory concerns about lenders' reliance on deposits that customers can withdraw with a click.
Regulatory Response and Risk Monitoring
After studies found that digital deposits can accelerate outflows at times of stress, regulators are checking whether they are adequately monitoring and measuring lenders' liquidity risks from their increased use of digital funding channels, the Bank of Italy said in its latest Financial Stability Report.
Risks for Smaller Italian Banks
Vulnerability of Less Significant Institutions
Such risk could be higher still for smaller banks which traditionally rely on a narrower pool of funding sources. These Less Significant Institutions are not under direct ECB oversight but are supervised through the Bank of Italy.
Statistics on Online Deposit Funding
Funding Data for December 2025
The Bank of Italy said it had calculated that in December 2025 that a group of 30 Italian LSIs had 11.5 billion euros in funds raised through online deposit platforms, or 10% of their overall funding.
Concentration Among Top LSIs
The top five LSIs accounted for three quarters of the sum, it added.
Benefits and Risks of Online Deposit Platforms
While acknowledging that online deposit platforms allowed Italian lenders to tap the European retail deposit market, the Bank of Italy warned these deposits are more volatile, in the absence of an established client relationship, and carried higher risks in terms of money laundering or terrorism financing.
(Reporting by Valentina Za; Editing by Kirsten Donovan)
