Question

This is the challenges/impact PDPA 2010 on banking industry.

1. Market Access

The revised Payment Services Directive has resulted in the expansion in the list of activities that payment institutions can carry out. Payment institutions can provide account information for accounts held at other payment service providers. This is weaken the banks market power.

2. Consumer Preferences

Retail consumers now demand to be able to integrate e-commerce, social media and retail payments. There is also an expectation to be able to switch across digital platforms. As banks are subject to myriad compliance obligations as discussed in the previous paragraphs, they are not in a position to offer these facilities to their customers. Due to compliance obligations, banks are forced to invest more on data security and resilience of their systems rather than on User preferences.

3. Evolution of Payments Technology

Payments technology as eidenced by contactless cards, online payments, mobile payments, are increasingly becoming common place. Keeping pace with this rapid evolution will require huge invesrments.

Give ways on how to manage this impact.

Answer 1

The PDPA 2010 will definitely have impact on the way businesses manage compliance in coming years. The banking sector is not immune.It already operates in a heavily regulated enviroment because of the type of persoanal data it receives with this data the subject might be vulnerable to fraud or other financial crime. In today's each and every person depends on banks for its financial requirements and hence the data available with the financial institutions is huge and banks already have system to manage such data and maintain confidentiality of these data. One of the important ethics the bank has to follow towards customers is maintaining confidentiality of the data of customer.

Digital teachnology is transforming the financial services industry. The role of technology in the financial sector is changing, earlier it made back office work efficient as machines replaced the clerk. It did not have relationship with the customer. But with changing requirements and for increase in growth of portfolio and porfitability the banking system as to adopt to new technology which would make the customer interaction with banks easy. The payment technology as eidenced by contactless cards, online payments, mobile payments are increadingly becoming common place and so banks are require to make huge investments in these areas. By investing in this area, the investment would lead not only to cash outflow for banks but also cash inflow which would result in growth in profitability banks. The better and easy the banking for the customers the more customers would deal with the bank and bank is likely to get new customers onboard.

Banks should undertake inspection of its current investment in technology for compliance purpose, study them and if any redundant system which does not add value to the bank should be replaced with new digital technology.The Bank can have centralise system where both compliance and customer part can be taken care of instead of multiple systems. The banks should evaluate ways in which in can share the cost of investments with other peers banks to reduce cost for all and maintain the confidentiality of data. Banks should undertake cost profit analysis of any new technology investment.

With proper analysis and decision the banks investment cost can be reduced