MNI BRIEF: Risks From Smaller Group of 3rd Party Providers-BIS

Digitalisation means that the financial system is increasingly reliant on a small number of third-party providers, the Bank for International Settlements General Manager will say on Wednesday, which could pose financial stability concerns as disruptions affect multiple institutions simultaneously.

Two other changes include geopolitical fragmentation, and the expansion of non-bank financial institutions, which has "created complex ecosystems of leverage, liquidity transformation and duration risk beyond the traditional prudential perimeter," Pablo Hernandez de Cos is expected to say in a speech. (See MNI INTERVIEW: Must Tackle Hedge Fund Debt Risk - BIS's Gelos)

De Cos, speaking in Geneva, acknowledged the complexity of financial regulation since the global financial crisis, raising the possibility of using new technology to reduce compliance costs, which currently amount to 1.5% of European banks' total operating costs.