How can financial services firms and fintech vendors support compliance?
The use of third parties and outsourcing arrangements is not a new concept, but regulatory scrutiny is intensifying. As a result, we have seen a global shift in third party risk management (TPRM) regulation.
Although the PRA is arguably taking the lead in Europe, the proposals and guidelines introduced by the Monetary Authority of Singapore (MAS), the Financial Stability Board (FSB) and the State Bank of Pakistan demonstrate that regulators finally take the non-technical risks presented by technology seriously.
Although different organizations govern different areas of activity, many of the key principles in these guidelines overlap, and all aim to help banking and financial services organizations identify, assess and manage third-party IT risks.
To remain compliant, financial institutions must ensure that they have pre-developed measures in place to maintain operational resilience in the event of a difficult exit scenario (i.e., failure or insolvency of the service provider). services, service deterioration and concentration risk), as well as plans for data recovery in accordance with specific regional regulations, helping to ensure the security of sensitive and customer data.
One way to reduce risk and maintain compliance is to store critical business information in escrow. This means that information is stored securely and can be easily retrieved if something goes wrong, ensuring continuity and availability for customers and stakeholders.