The Prudential Regulation Authority published a consultation paper on Monday proposing enhanced capital requirements for deposit-taking institutions that source a material proportion of their funding through fintech platforms and open banking integrations. Under the proposals, firms where more than 25 per cent of retail deposits are originated via third-party digital channels would face an additional capital buffer of between 1 and 3 percentage points, calibrated according to the concentration and behavioural characteristics of digitally sourced deposits.

The PRA said the proposals reflect growing evidence that deposits acquired through savings marketplaces and fintech aggregators exhibit higher volatility than traditionally sourced funds, with withdrawal rates up to three times greater during periods of market stress. Deputy governor for prudential regulation Sam Woods said the regulator was "not seeking to impede innovation" but needed to ensure that the prudential framework kept pace with evolving funding models. "The speed at which deposits can move in a digitally connected financial system requires us to think carefully about the assumptions underpinning our capital framework," he said.

The proposals have alarmed both challenger banks and the savings platform sector. Raisin UK, which connects savers with deposit-taking institutions across the UK and Europe, warned that the additional capital costs could be passed on to consumers in the form of lower interest rates. Starling Bank chief executive Raman Bhatia said the PRA risked "penalising digital innovation rather than addressing genuine prudential risks," adding that the bank's digitally sourced deposits had proven more stable than the industry average during the 2023 interest rate volatility. The consultation closes on 28 February 2026, with final rules expected in the second quarter.