Australian Securities and Investments Commission (ASIC) commissioner Sean Hughes has highlighted data and technology systems as a key area where financial institutions need to step up their game. Speaking at the Australian Retail Credit Association Conference on November 13th, Hughes said a review of breach report samples lodged with ASIC point to “underinvestment in technology systems” as a root cause of breaches in a significant number of cases.
Hughes went on to report that underinvestment in technology accounts for about 40% of breaches related to bank overcharging and around 70% in insurance overcharging, and he pointed to significant and pervasive limitations to the systems in use among a wide range of financial institutions. “This creates operational risks and suggests historical Board and management decisions on the development and maintenance of these systems have not placed the long-term interests of the consumer at the core,” Hughes said.
A combination of poor systems and poor governance means delays in picking up problems and, ultimately, result in lengthy and costly remediation programs. However, Huges noted that institutions with better data and technology capability – for example analytics and AI – were able to respond more quickly and in a targeted fashion. Promoting the adoption of superior technologies and approaches to managing such non-financial risks is an increasing priority for Australian regulators, among their global peers.