Catch up in the cloud – regulatory reaction to COVID-19
While the industry has experienced an oft-touted acceleration towards digital services since the start of the COVID-19 pandemic, what are regulators doing to keep track?
Alex Hamilton, deputy editor at FinTech Futures, spoke to Rajashekara V. Maiya, vice president and global head of business consulting at Infosys Finacle, about the impact the last year has had on the way regulators approach innovation.
Have the past 12 months changed the way regulators approach financial institutions?
Protection of customer interest and the safeguarding the trust in the financial system has continued to be paramount for regulators.
Yet in the past 12 months, they have increased their supervision on digital transactions, cybersecurity and safeguarding digital assets against any fraudulent transactions. This includes creating awareness around digital transactions, securing data and confidentiality.
With this increased scrutiny, how can banks and FIs meet new digital challenges in a compliant manner?
Banks and FIs in the last 12 months have spent significant amounts of effort and money on securing IT infrastructure, customer data, and providing a secure and safe way to transact digitally.
Banks and FIs also have started their journey towards cloud in a comprehensive way, such that they concentrate on their core business of banking.
Similarly, they also have built or enhanced their solutions to take care of business financing, and relief cheques disbursement as expected by the regulators to support the economy.
How can a chief technology officer (CTO) build compliance into the deployment of new systems and services?
While fundamentally nothing significant has changed from a compliance angle in deployment of new systems, additional measures and steps need to be taken to protect the IT infrastructure, build robust cyber security framework, and provide a secure way of login for end customers and users of the bank.
Compliance worries once stopped banks from innovating. Five years ago, concerns about the cloud stopped many from taking the plunge. Have these issues been ironed out?
Absolutely, what were options before the COVID-19 pandemic have become compulsions now. Cloud is one such area where banks have advanced their plans of moving to cloud at scale owing to recent events.
This is going to not only reduce the burden on banks to keep up with the latest security expectations but also reduce their total cost of ownership in the long run. Similarly, banks have also been forced to move towards digital at scale under much reduced time frame.
With a scramble to the cloud ongoing, what are regulators doing to help the transition?
Globally, many regulators are favouring cloud-based computing for banks. In Hong Kong, Singapore, and India jurisdictional regulators have formed guidelines on how to move towards cloud. The COVID-19 pandemic has only brought forward the cloud journey for banks.