Rethinking retail deposit supervision in the digital banking age

Abstract

Online Deposit Platforms (ODPs) are transforming European retail banking by removing geographic barriers, allowing smaller credit institutions to access cross-border liquidity without physical branches. However, ODPs convert granular retail savings into rate-sensitive, highly volatile balances resembling short-term wholesale funding, challenging standard microprudential runoff assumptions under stress. Additionally, layered structures like fiduciary omnibus accounts obscure depositor visibility, fragment compliance responsibilities and elevate financial crime risks. To address these risks, European regulators must move from entity-centric supervision to an activity-based paradigm. This requires platform-specific stress testing, real-time transparency into pooled accounts and binding compliance standards across the intermediation chain.