Consumers around the world are slowly gravitating towards digital banking. As this concept gains more mainstream traction, the question becomes whether or not there is a need for additional regulation. Existing guidelines for banking do not translate well to the digital world, and fraud numbers seem to be on the rise again.
More Regulation On The Horizon For Digital Banking?
Anything that has to do with the Internet faces a lot of scrutiny. At the same time, internet-based services pose a significant security risk because of lackluster protection. Digital banking is a convenient solution to access financial services, but it also allows for higher fraud rates. Money laundering and fraudulent transactions remain a constant threat.
Some of the existing banking guidelines have been modified to address online security concerns. Despite legislative efforts, hackers are not overly concerned by the letter of the law and continue their attacks against the banking ecosystem. In fact, it appears that the number of attack vectors has only increased. Something will need to change.
Providing control systems and regulatory frameworks to reduce fraud to near zero is priority number one. Doing so, however, will pose quite a few challenges. Minimizing the number of data and information breaches requires a significant upgrade of core banking systems and security protocols. Not only will this take a lot of time, but it will also require significant budgeting.
In its current state the vast majority of digital banking services reside in the cloud. Unfortunately, the cloud just means someone else’s computer is hosting the service, which adds no significant security by default. Instead, it removes some of the control that the enterprise should have over their own systems.
Moreover, regulation is not the answer to technological threats by any means. Hackers do not follow an ethical code, nor are they too concerned about legislation in other countries. In the end, no piece of paper with some rules on it will stop them from attacking critical systems. Only security measures can prevent damage from being done, and a course of action is more than warranted right now.
One thing to keep in mind is how proper technological security standards could reduce the need for regulation in the long run. At the same time, technology can provide a secure environment for both institutions and customers. Digital banking is the new norm, and it is time to pay attention to the areas that matter, rather than draft new laws.
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