Domestic banking sector at risk from sophisticated cyber threats: MAS

Innovation is critical to financial institutions.

Singapore’s goal to become a smart financial centre is at risk from ever more sophisticated cyber threats, Monetary Authority of Singapore Managing Director Ravi Menon said in a speech today.

“A smart financial centre must be a safe financial centre. Technology can be a double-edged sword. If not managed well, it can potentially lead to a variety of risks in the financial industry. As more financial services are delivered over the Internet, the frequency, scale, and complexity of cyber attacks on FIs have increased globally. Hackers and cyber criminals are constantly probing IT systems for weaknesses to exploit,” Menon said, speaking at the Global Technology Law Conference 2015.

Menon said that to ensure cyber security, MAS’s regulatory approach towards fostering innovation and the adoption of new technologies will take three forms.

The first approach involves innovation owned by financial institutions (FIs). Menon noted that in matters of innovation, FIs are free to launch new ideas without first seeking MAS’ endorsement, as long as they are satisfied with their own due diligence.

The second approach involves innovation in a so-called "sandbox", particularly when it is not clear whether new products comply with regulatory requirements.

"FIs could adopt a “sandbox” approach to launch their innovative products or services within controlled boundaries. The intention is to create a safe space for innovation, within which the consequences of failure can be contained," he said.

The third approach is related to innovation through co-creation, wherein the MAS will engage FIs to jointly come up with proposals.

“Cyber threats will not go away. Like a cat and mouse game, both hackers and cyber defenders have been enhancing their tools and techniques along with advances in technology as well as in response to one another. The first priority on our journey towards a Smart Financial Centre is therefore to continually strengthen the industry’s cyber security,” he said.