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Regulation biggest hurdle for banks’ digital shift
Oisin Tobin of MH&C

06 Apr 2022 / business Print

Regulation biggest hurdle for banks’ digital shift

A survey carried out by business-law firm Mason Hayes & Curran LLP (MHC) has found that professionals working in financial services see regulatory issues as the greatest challenge to digital transformation in the sector.

Risk identification and assessment, and a scarcity of talent, were also seen as significant challenges by the 100 people surveyed.

The survey was carried out at a recent webinar that focused on the legal and regulatory challenges facing financial institutions as they try to enhance their digital service offering.


“Given that financial services is one of the most heavily regulated sectors, it’s not surprising that firms have identified regulation as their biggest challenge when it comes to digital transformation,” said Liam Flynn (partner and co-head of MHC’s financial regulation team).

Flynn added that it was critical for firms in the sector to understand their obligations under Irish and EU law – and to comply with Central Bank requirements – when developing new digital financial products and services.

MHC lawyers pointed out that additional regulatory challenges could arise when firms were subject to the requirements of several European regulators, or when they entered cross-jurisdictional arrangements.

‘Patchwork quilt’

Dermot McGirr (MHC commercial partner) referred to the ‘patchwork quilt problem’, where firms had several guideline requirements from different regulators applying to their contracts.

“The guidelines will all deal with very similar issues, but in slightly different ways, and some are more onerous than others,” he said.

McGirr urged firms to identify which if these requirements were the most onerous, and make that their threshold, or high-water mark, that needed to be reflected in their contracts.

Biometric verification

Oisin Tobín (MHC technology partner, pictured) pointed to areas where different regulators had different areas of focus, citing the example of the potential use of biometric verification to access financial products or services.

“We’ve heard from some London-based Financial Services organisations who seem to be of the view that the Financial Conduct Authority (FCA) is pushing them in that direction,” he said, adding that such a move was likely to lead to much scrutiny from the Data Protection Commission and other regulators.

The MHC survey also found that, to support digital change in their organisations, 40% of financial services firms would choose to allocate additional resources to their IT departments.

A quarter would give more resources to compliance, with almost a quarter opting to allocate more to risk.

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