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Fintechs to lay out a code for technology vendors amid rising cyberthreats and security risks

By · Published by Everything Blog

In short

The initiative targets critical external service providers that handle essential operational workflows, including KYC verification, loan disbursements, collections, and customer onboarding. Even though the central bank does not directly supervise these tech firms, recent security incidents have forced financial institutions to re-evaluate their external dependencies. UFF intends to promote these standards so that adopting the code operates as an informal accreditation system for partner evaluations.

Key points

  • Operational disruptions at unregulated third-party technology vendors pose significant di…: Operational disruptions at unregulated third-party technology vendors pose significant direct risks to regulated financial institutions.
  • Recent cyber incidents involving external technology providers have triggered a broad rea…: Recent cyber incidents involving external technology providers have triggered a broad reassessment of institutional vendor selection strategies.
  • Industry self-regulation aims to establish operational resilience and accountability acro…: Industry self-regulation aims to establish operational resilience and accountability across the expanding financial technology partner ecosystem.

Sources checked by our analysis pipeline: 1

The RBI-recognised self-regulatory organisation for the fintech sector is working on a framework for Technology Service Providers (TSPs) and Regulatory Technology, or RegTech, firms that will prescribe standards around governance, cybersecurity preparedness, operational resilience and accountability.

UFF will encourage its members to register and work with technology vendors that participate in the SRO-led framework, people cited above said. Over time, such registration could develop into a de facto accreditation mechanism, allowing lenders and fintech companies to differentiate between vendors on the basis of their adherence to prescribed technology and governance standards.

"UFF is in the process of developing a framework, including a Code of Conduct for Technology Service Providers and RegTech firms, to encourage responsible business practices, sound governance and greater adherence to technology and operational best practices," said Jatinder Handoo, chief executive officer of UFF.

"The framework is intended to promote a culture of accountability, transparency and responsible participation among entities that play an important role in the fintech value chain," he said.

Handoo said UFF would encourage its members to register and work with TSPs that are part…

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