Tech advancements in financial sector needs regulation to overcome challenges

ISLAMABAD: Technology advancements have brought about transformation in the financial services, but they are simultaneously leading to challenges that need regulations, a senior official said.

The State Bank of Pakistan’s (SBP) Executive Director Qasim Nawaz said business process reengineering was at the core of innovation in banks until a few years back.

“While advancements in technology have further transformed the horizon of financial services, these innovations are also raising challenges of their own,” Nawaz said, addressing a seminar at the National Institute of Banking and Finance.

The three-day seminar titled ‘Internal Audit: Emerging Challenges and Effective Practices in Central Banks’ was concluded on Friday, according to a statement. It was held under the aegis of Saarc (South Asian Association for Regional Cooperation) Finance Forum. Officials from SAARC central banks participated in the event. The delegates of the central banks also presented their country papers for the information of the audience.

The SBP director said the board and the senior management of the State Bank are cognizant of the need to align its internal operations to the changing environment, and promote innovation in the financial sector in a regulated environment.

Global banking system is frequently coming under cyber attacks that cause monetary losses as well as dent to the brand equity. A score of Pakistani banks underwent botched cyber attacks over the past couple of months with litany of their cards’ data put on sale at underground online shops. The identity theft – though couldn’t render loss to the banks – pushed the financial sector to revisit their anti-cyber threats mechanism.

Saarc Finance’s keynote speaker Horst Simon, discussing technological risks faced by business around the world, highlighted the importance of risk culture inculcated within the organisation.

Simon emphasised roles and responsibilities of the board, senior management and the employees to maintain a robust risk management mechanism.

Zayeem Bin Alam, senior manager of PricewaterhouseCoopers discussed the risks of cyber security, social media, data privacy and third party risks and offered an IT auditor’s perspective of how to address those risks by discussing controls.

Syed Sohail Javaad, director of Payment Systems Department shared the ongoing developments about digital payments, their importance, evolution, the benefits of disruptive technologies to regulators, the emerging risks and appropriate responses to them from perspective of internal audit.