A new report published by trade association UK Finance and Parker Fitzgerald has stated that the digital transformation within the financial services industry is accelerating the creation of new non-financial risks.
The report titled ‘Sustainable Financial Services in the Digital Age’ emphasises that the firms need to assess their operational resilience and risk exposure in this digital age.
It states that the utilisation of the new technologies such as artificial intelligence, cloud computing and distributed ledger technology (DLT) enables the financial services to provide new services as well as develop new platforms. It also helps to reduce operational costs.
However, it also elucidates that failure to resolve new risks and addressing internal risk management processes can result into systemic and operational threats which include cyber vulnerabilities.
Accordingly, the report recommends collaboration involving technology suppliers and domestic as well as cross-border regulators to develop a risk framework that will look to secure data at the core of sustainable digital finance, reduce the difference of the firm’s digital aspirations and the reality of legacy IT estates.
It will also assess the integrity of fintech solutions which are part of the supply chain.
UK Finance director of technology & digital Dan Crisp said: “Given today’s ever-increasing threat of cyber-attacks and data protection violations, it’s vital that the financial services sector prioritises operational resilience – just having a firewall simply doesn’t cut it.
“The speed and scale of digital transformation makes it essential for new technologies to be integrated safely within existing operating models while minimising risk.”