We will soon be setting up a dedicated unit on SupTech, to synergise and strengthen these efforts and help sharpen our supervisory practices. Cyber security And last but not least, cyber security. Cyber-attacks are a growing threat to the financial ecosystem, and FinTech could potentially accentuate this risk. As more financial services are delivered over the internet, there will be growing security and privacy concerns from cyber threats. And maybe even systemic concerns. It is not inconceivable that the next financial crisis is triggered by a cyber-attack. We need to develop the regulatory and supervisory capabilities to address these emerging threats. Cyber risk management will be the new frontier for global regulatory efforts and supervisory cooperation. The BIS has set up a taskforce to develop international guidelines on cyber-security responsibilities for banks and fund-transfer providers, with the aim of making global payments safer. More such initiatives are likely in the years ahead. Another area that will be a growing focus is information sharing. Unlike other traditional risks facing financial institutions, cyber risks are less visible and yet often afflict multiple firms at the same time given the interconnectedness of the financial sector. The sharing of timely and actionable cyber information among financial institutions is therefore key to building resilient cyber defences within the financial ecosystem. MAS has collaborated with the Financial Services Information Sharing and Analysis Centre (FSISAC) to establish an Asia Pacific (APAC) Regional Intelligence and Analysis Centre. The Centre will encourage regional sharing and analysis of cybersecurity information within the financial services sector.

National regulators have been stepping up engagement with financial institutions on issues pertaining to culture and conduct. The industry must itself take collective responsibility to promote good practices and develop codes of conduct, and hold institutions accountable to their peers. Here in Australia, you have set a good example. The Australian Bankers’ Association has commissioned an independent review of sales commissions and product-based payments in retail banking that is now in its final stages. Banks have also agreed to share information among themselves on financial advisers with a history of poor conduct. But ultimately it is the financial institution itself that must bear responsibility for getting the culture right. There are a couple of things they can focus on. 2/7  BIS central bankers' speeches  First, set a clear tone from the top that is supported by concrete policies and leaders that walk the talk. Management decisions must consistently reflect the firm’s espoused values. Second, align human resource (HR) policies with the desired culture. From recruitment and training to rewards and penalties, compensation to career development, HR policies send the clearest signal to staff on the values that the firm regards as important. This is difficult but important work. We must move the financial industry to look beyond the question “is this legal” to the larger question “is this right”. Positioning regulation for technological innovation Let me now move to the third key thrust of financial regulation going forward – how to position for technological innovation. Financial technology or FinTech is transforming financial services.