Future regulations will be aimed at identity verification, Open Banking, AI, cryptocurrencies and biometric authentication, in order to enable secure, digital global economies. The introduction of new regulations has been driven by the ongoing Coronavirus pandemic that has brought about more remote banking than ever before.
OneSpan, the global leader in securing remote banking transactions, today released the inaugural OneSpan Global Financial Regulations Report. The report examines regulatory and legislative initiatives impacting financial services globally in fraud prevention, digital identity, data protection, payments, Open Banking, e-signatures and more.
Governments around the world are considering and enacting laws, policies and regulations to enable and protect digital transactions and commerce, with the global COVID-19 pandemic further increasing the focus on remote banking, telehealth and other remote alternatives for essential activities. This is in large part due to the pandemic having exposed shortcomings in the current security, data management and privacy policies of financial institutions and others. At the same time, the race to digitize the industry to keep pace with evolving customer expectations and competition is also driving rapid regulatory change.
As a result, there will likely be more data privacy and data protection laws enacted throughout the world, each bringing unique regulatory requirements for financial institutions. To help financial services leaders navigate the uncertainty, the OneSpan Global Financial Regulations Report includes guidance on the following trends:
Artificial Intelligence is under increasing scrutiny as adoption grows: Regulators and governments worldwide are grappling with the creation of frameworks for the development and application of AI that focus on data protection and privacy, as well as the ethical and transparent use of the data.
- Digital identities and remote account openings are gaining traction worldwide: Regulators in Hong Kong, Pakistan, Greece, Macedonia, Mexico and Turkey approved remote bank account openings in 2020 – a clear indicator that even processes rooted in traditional face-to-face meetings in the branch are now going digital and touchless around the globe.
- Open Banking is growing rapidly throughout the world: As third-party providers (TPPs) are allowed to use banking information to help consumers save money, borrow more easily and pay efficiently, banks will increasingly work with TPPs. In the U.S., the Consumer Financial Protection Board (CFPB) issued an Advanced Notice of Proposed Rulemaking on consumer authorized access to financial data, which could be the catalyst for Open Banking in America.
- Facial recognition is driving the greatest changes to banking regulations: As banks increasingly use facial recognition technology for Identity Verification requirements, they are housing large amounts of consumer biometric data. Standards organizations such as the National Institute of Standards and Technology (NIST) and Fast IDentity Online (FIDO) Alliance and are developing frameworks that could be adopted at the national level and would stipulate how banks protect and store their customers’ biometric data.
- Regulation is on the way for cryptocurrencies: As digital banking platforms have experienced massive growth, many governments and industry bodies worldwide have begun to look to Central Bank Digital Currencies (CBDCs) and cryptocurrencies in terms of what they might add to the financial sector. This has resulted in new and refreshed conversations around the possible uses of CBDCs and cryptocurrencies.
“The COVID-19 pandemic could become the most serious challenge to financial institutions in nearly a century, while at the same time the industry grapples with massive changes driven by regulatory developments,” said OneSpan CEO, Scott Clements. “Banks must act now to prepare for the significant changes coming their way in 2021. OneSpan’s inaugural regulations report will arm banks and financial institutions with the information they need to plan accordingly and be well-positioned for the industry transformation that has already started.”