Easier Conditions for Using Cloud Computing Technologies
The Israeli Banking Supervision Department has announced that it will allow banks to use cloud computing technologies without having to obtain a special regulatory permission, as they were required to until this announcement. The reason for taking this step, according to the Banking Supervision Department, is due to the advantages of such technologies and their ability in order to improve their flexibility and response time in the development of new products, improve their services to customers, increase the banks' efficiency, and cooperate with Fintech companies.
The draft amendments to the IT Management Directive and the Cloud Computing Directive have removed the requirement to request permission from the Banking Supervision Department on each occasion prior to implementing cloud technology for several types of applications, such as storage. Instead, the banking corporation's board of directors and the senior management will bear responsibility for risk management in these cases.
The amended directives state, inter alia, that each bank's policy must define the material cloud computing, as well as applications for which the management's approval is required, and that a banking cooperation will be required to send to the Banking Supervision Department an annual update of the cloud applications and future applications to be implemented.
Mandatory Board of Directors Committee for Technology & Innovative
In addition, the regulator has published a draft revision to the Proper Conduct of Banking Business Directive on Board of Directors, which would require the Board of Directors to establish a dedicated committee for information technology and technological innovation within the Board, and limit the term of the chairmen of Board of Directors committees.
According to the Banking Supervision Department's announcement, it attributes great importance to accelerating the adaptation of the existing banking corporations to the new world in areas of business innovation based on technology, infrastructure, and the management and use of information, while adjusting risk management.
Therefore, the regulator is encouraging cooperation between the banking corporations and fintech companies to enable the banking corporations to innovate more easily and efficiently, with the aim of increasing value to the customer through better products and services. To achieve these goals, the Banking Supervision Department is acting on a number of levels, including the removal of regulatory impediments (as demonstrated in the amendment to the cloud computing regulations above) and leading broad infrastructure projects.
The amended Directive defines the functions and composition of the committee, as well as its work methods, as follows:
- The committee will deal with a variety of topics connected with the area of information technology at banking corporation: the banking corporation's information technology strategy and management policy, technological innovation, appropriate resource allocation for effecting work plans in the areas of technology, preparedness for disaster-recovery after incidents such as cyber-attacks as part of managing the technological risks faced by the banking corporation, and more;
- The committee will emphasise areas of technological innovation, readiness for the bank of the future, competition created vis-à-vis new technology-based financial actors, and the new risks faced by the bank due to new activity it intends to undertake and the technologies it intends to adopt. Special emphasis will be placed on innovation risks in the adoption of new technologies;
- In addition, the amended Directive includes a requirement to limit the term of the chairman of a Board of Directors committee, in order to ensure periodic rotation and renewal that will keep things challenging.
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