How can Hong Kong banks reconcile third party data sharing with cybersecurity?

Banks need robust cyber resilience strategies to plug risks.

With open banking gaining momentum across much of developed Asia, accounting firm KPMG cautions Hong Kong banks to avoid jumping into the bandwagon without proper cybersecurity mechanisms in place.

Also read: Singapore beats Hong Kong in open banking readiness

“As banks continue to team up with fintech and technology partners to deliver services more efficiently for customers, it is important to keep in mind that every new third-party relationship and digital connection increases cyber risks,” KPMG said as banks across the world embrace emerging technologies like open application programming interfaces (open APIs) and robotic process automation (RPA).

“Banks in Hong Kong therefore need to ensure that they embed cyber risk management processes into all digital initiatives and adopt a robust cyber resilience strategy,” the accounting firm said in observance of the Cybersecurity Fortification Initiative rolled out by the Hong Kong Monetary Authority (HKMA).

Upcoming initiatives like HKMA’s Faster Payment System which allows banks and stored value operators to provide real-time payment services also highlights the need of boosting fraud detection capabilities in real time, KPMG added.

“Whilst regulatory initiatives like the CFI are providing banks in Hong Kong with an improved framework to evaluate risk exposure and ensure better prevention, detection and response capabilities, we believe that the banking sector should continue to strive to strengthen overall cyber resilience.”

Banks that have sound cybersecurity and resilience models in addition to adoption of new technologies will be best placed to capture the opportunity of such tech, concluded KPMG.