This edition of Relm’s Risk Wrap features four emerging risks with implications for brokers and underwriters, spanning everything from unauthorized tokenization and regulatory crackdowns in Banking-as-a-Service to the push for AI-aware cyber defenses.
BaaS Reckoning: Regulatory Crackdown After Synapse Collapse
The collapse of Synapse and the Fed’s cease‑and‑desist order against Evolve Bank have triggered a regulatory reckoning in Banking‑as‑a‑Service (BaaS).
Regulators are reasserting that sponsoring banks retain full accountability for compliance, consumer protection, and oversight of fintech partners — illustrated by the new FDIC “Synapse Rule.”
As Steve Bishop of CBS42 puts it, “One misstep in a fintech partnership isn’t just a nuisance — it can become a headline, a cease‑and‑desist order, or a brand‑destroying event.”
Implications for brokers and clients
- Regulatory Risk Assessment: Underwriters will demand deeper due diligence on BaaS structures and bank–fintech governance.
- Policy Conditions: Expect stricter representations & warranties around third‑party oversight.
- Client Advisory: Brokers should guide clients on maintaining robust controls and documented oversight frameworks.
Source: CBS42. (June 12, 2025). After Synapse Collapse and Evolve Bank Action, U.S. Banks Confront a Reckoning in BaaS.
Stablecoins May Not Revolutionize Payments
Despite trillion‑dollar forecasts, stablecoins face headwinds from faster payment rails and entrenched fintech systems. Major banks like JPMorgan caution that advancements in Alipay, WeChat Pay, and other instant‑payment platforms make blockchain‑based solutions “less attractive.”
As a result, demand for tokenized payments may underdeliver, even as higher interest rates promise greater yields (and risks) for issuers and users alike.
Implications for brokers and clients
- Market Adoption Risk: Insurers may adjust appetite for stablecoin ventures if projected transaction volumes fall short.
- and Settlement Risk: Policies should clarify coverage for transaction failures, liquidity shortfalls, and settlement delays.
- Underwriting Metrics: Clients may need to provide stress‑tested adoption scenarios and backup settlement arrangements.
Source: Financial Times. (July 3, 2025). Stablecoins might revolutionize payments, but what if they don’t?
RBI Urges Zero‑Trust and AI‑Aware Cybersecurity
India’s Reserve Bank (RBI) has called on financial institutions to adopt zero‑trust frameworks and “AI‑aware” defence strategies as cyber threats escalate.
Generative AI is now fueling sophisticated deepfakes and phishing campaigns, while vendor lock‑ins and third‑party dependencies pose systemic risks across the sector. The RBI’s guidance stresses risk‑based supervision, continuous monitoring, and vendor‑risk management.
Implications for brokers and clients
- Cyber Underwriting Expertise: Brokers must deepen cyber risk capabilities to advise on zero‑trust architectures and AI governance.
- Policy Enhancements: Underwriters may mandate advanced security controls (e.g., behavioral analytics, micro‑segmentation) as conditions of coverage.
- Client Roadmaps: Firms should develop detailed implementation plans for zero‑trust and AI‑enabled monitoring to support renewals.
Source: Times of India. (June 30, 2025). Cyber risks in financial sector: RBI calls for AI‑aware defence and zero‑trust approach.
Klarna Pivots Amid Credit and Regulatory Pressure
Facing tighter BNPL regulations and rising credit stress, Klarna is repositioning itself as a “digital bank” rather than a pure buy‑now‑pay‑later provider.
Liam Evans of PwC observes: “Klarna’s pivot is not just about growth. It’s really survival in a market which is no longer a defensible position.” New affordability checks and credit‑score impact rules in multiple jurisdictions are reshaping the BNPL landscape and elevating demand for niche insurance solutions.
Implications for brokers and clients
- Product Evolution: Insurers may develop bespoke credit‑risk policies tailored to digital‑bank models.
- Regulatory Compliance: Coverage language must address evolving standards around affordability testing and consumer disclosures.
- Credit Risk Analytics: Clients should bolster underwriting models to reflect regulatory shifts and borrower behavior changes.
Source: Financial Times. (June 30, 2025). Klarna accelerates shift to digital bank ahead of second IPO attempt.
Want more market insights?
To get more insights into what’s informing emerging risk markets, check out Risk Wrap 007. Each issue unpacks high-impact developments across insurance, risk, and emerging exposures, helping brokers and clients stay a step ahead.
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