Singaporean Lawmakers Probe MAS On Digital Banking Failures

July 8, 2022
Members of Singapore’s parliament have questioned the Monetary Authority of Singapore (MAS) on a range of matters, including how the country can improve on recent banking outages, ESG rules and crypto protections.

Members of Singapore’s parliament have questioned the Monetary Authority of Singapore (MAS) on a range of matters, including how the country can improve on recent banking outages, ESG rules and crypto protections.

Singapore, a hub in Asia for financial services, has failed to put to bed the issue of banking outages over the past 12 months, the most notorious of which lasted for days.

Tan Wu Meng, a member of parliament (MP) sitting with the governing People’s Action Party, has now posed the question of why this has been the case.

Wu Meng asked: How many banks regulated by the MAS have recently experienced an interruption of digital banking services and for how long? How many customers are affected? Whether MAS has assessed the dependencies of financial institutions on third-party cloud computing networks, including the provision of digital banking services? And, what lessons have been drawn from the interruption of service?

“Since July 2021, four major retail banks have reported a total number of eight interruptions to their digital banking services,” said Tharman Shanmugaratnam, the minister responsible for the MAS, adding that the incidents were mostly resolved within three hours.

Outages affected on average about 12,000 banking customers, with the numbers ranging from 500 to 37,000, while the longest interruption of 39 hours was experienced by DBS Bank between November 23 to 25 last year. This arose due to a malfunction with the bank’s access control servers.

Shanmugaratnam continued that the root causes of these incidents “lay mainly within the banks themselves”. Software misconfigurations, system malfunctions and errors that were introduced when the banks were making system changes were cited as explanations, while one of the incidents was related to an outage in a third-party cloud service provider.

“MAS takes all IT incidents seriously that affect the availability of digital banking services. It requires banks to be able to recover systems supporting critical banking services such as fund transfers and payments services within four hours following any disruption,” the minister said.

He also pointed out that the total unscheduled downtime for each critical system must not exceed four hours within any 12-month period and that the MAS takes supervisory action when the banks breach these requirements.

In the case of the prolonged interruption in DBS Bank’s digital banking services in November 2021, the MAS directed the bank to appoint an independent expert to conduct a comprehensive review of the incident, including the bank’s controls and recovery actions, as well as how a similar incident can be prevented in future.

DBS bank has also been directed to rectify all shortcomings identified from the review and implement measures to ensure that any future disruption to its digital banking services is resolved quickly and adequately.

The MAS has further sanctioned the bank by making it hold additional capital until all shortcomings identified from the review are “satisfactorily rectified”.

“The recent incidents highlight the need for banks to continually review their IT resilience strategy, and ensure that there is sufficient redundancy and fault tolerance built into their digital banking IT infrastructure,” said Shanmugaratnam.

In addition, the lawmaker said that swift diagnosis and recovery of systems, coupled with robust business continuity management, are critical in minimising the impact of an IT disruption.

“The technology landscape that banks operate in is becoming more complex. It is hence critical that banks continually maintain and uplift the security and resiliency of their IT systems so as to maintain stability and trust in the banking system,” he said, insisting that the MAS will continue to work closely with the industry in this regard.

No further crypto restrictions

Shanmugaratnam also answered a question from fellow People’s Action Party MP Murali Pillai regarding crypto-asset use in the country.

Pillai asked whether the MAS intended to “implement further restrictions on cryptocurrency trading platforms with a view to protect unsophisticated persons from entering into such trades which are considered highly risky?”

The MAS said it will not, for now.

“MAS has been carefully considering the introduction of additional consumer protection safeguards,” said Shanmugaratnam.

These may include placing limits on retail participation, and rules on the use of leverage when transacting in crypto-assets. “

Given the borderless nature of cryptocurrency markets, however, there is a need for regulatory coordination and cooperation globally. These issues are being discussed at various international standard-setting bodies where MAS actively participates.”

Sustainable finance has also been a topic of interest for lawmakers, with Foo Mee Har, another member of the People's Action Party, asking: “whether the Government intends to spur the adoption of sustainable finance amongst financial institutions with incentives or regulations to encourage the active promotion of green financing and achieve basic competency standards in green financing.”

The minister pointed to several guidelines published as well as actions taken in collaboration with the industry in his response, as well as confirming that the MAS is also developing strong sustainable finance research and a talent development ecosystem.

This comprises centres of excellence in universities, reputable training providers and Asia-Pacific sustainability hubs established by financial institutions.

“This will deepen and expand Asia-focused climate research and training and develop a strong pipeline of local sustainable finance talents,” said Shanmugaratnam.

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