APRA published its submission, to the Senate Select Committee, on financial technology and regulatory technology. The submission outlines how APRA is evolving its regulatory framework and approach to support the developing fintech and regtech sector, while ensuring risks are appropriate managed in line with the APRA mandate of financial soundness and stability. APRA also seeks to implement regtech within its own data collection systems and processes, thus helping improve efficiency and accessibility.
As per the submission to Senate Select Committee, APRA holds both a direct and a supporting role in relation to fintech and regtech:
- As fintech and regtech industries grow and mature, APRA seeks to understand the opportunities and risks they bring to institutions and the system and adapt to maintain sustainable, open, and technology neutral policies and practices.
- Where fintech or regtech companies seek a license or provide services for regulated entities, APRA seeks to allow for opportunities and innovations without undue policy or supervisory barriers, while ensuring risks are appropriately managed.
- In collecting and publishing data from the financial sector, APRA seeks to maintain modern practices and to be transparent in relation to information that can assist the market.
- Regtech can potentially be of benefit to the own operations of APRA. One of the 2019-2023 strategic initiatives of APRA is to transform data-enabled decision-making and APRA is exploring ways of using technology to assist with this.
- APRA undertakes significant domestic engagement with other regulators, such as with ASIC and the ACCC, as well as with industry. This engagement builds understanding and assists coordinate regulatory activities across agencies.
The APRA submission highlights that improving cyber resilience across the financial system is one of its four strategic focus areas in the 2019-2023 Corporate Plan. APRA has a prudential standard CPS 231 on outsourcing, which is being reviewed to reflect the changing environment for service providers and the revised version of this standard is expected to be consulted on in 2020. The APRA submission highlights that the business continuity standard CPS 232 is also being updated in 2020. As per APRA, entities must have contingency plans in place to enable them to deliver critical services continuously, despite plausible cyber or other disruptions. APRA has also published guidance on the management of risks arising from cloud computing services. This guidance was most recently revised in September 2018, reflecting the growing adoption of these services and the developing risk management practices among financial institutions. Finally, APRA has an information security prudential standard CPS 234, which requires entities to maintain a capability to prevent, detect, and respond to cyber incidents and other information security incidents in a timely manner and to advise APRA of material incidents.
Keywords: Asia Pacific, Australia, Regtech, Fintech, Operational Risk, Data Collection, Reporting, Cyber Risk, APRA
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