Decision / Product
Holding customer balances
Should we hold funds ourselves, or keep them somewhere else?
Holding customer funds is one of the clearest examples of a commercial decision with a disproportionate regulatory consequence. It can change the activity, the permissions and the operating model at once.
Simulation compares the routes to the same commercial outcome: hold, hold through a partner, or avoid holding altogether.
Regulatory delta
What this decision tends to move
The delta is the difference between the institution's position today and its position if this decision were executed.
- Activity
- Whether the institution becomes a holder of funds.
- Safeguarding
- How funds must be segregated and evidenced.
- Permissions
- What authority the holding requires.
- State exposure
- Which states the holding brings into scope.
- Reporting
- What must be reported, and how often.
Design space
Ways to reach the same commercial objective
Two configurations that achieve the same outcome frequently produce materially different regulatory deltas. Comparing them is how the decision is made.
Option 01
Institution-held balances
Direct consequence, direct control.
Option 02
Partner-bank held balances
Dependency and oversight consequence.
Option 03
Pass-through with no holding
Smallest delta, narrower product.
Before committing
What management should establish first
- Whether the product genuinely requires holding
- What each holding model implies operationally
- How the answer changes state by state
Common questions
Questions this page answers
Is pass-through always safer?
It usually produces a smaller delta, but it also constrains the product. The trade-off is the decision.
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