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Software risk and compliance round-up: May


Monetary Authority of Singapore imposes additional capital requirements on DBS after repeated disruption to its digital banking services

The Monetary Authority of Singapore (MAS) has imposed additional capital requirements on DBS – Singapore’s largest bank ranked by assets – following disruptions to its digital banking services in recent months, which saw their digital banking services widely unavailable on March 29th, and disruptions to digital banking and ATM services on May 5th.

Commenting on the announcement, Ho Hern Shin, deputy managing director at MAS said: “The additional capital requirement imposed at this time underscores the seriousness with which MAS treats this matter,” she said. “DBS Bank must spare no effort in dealing with the underlying issues leading to these disruptions.”

DBS Group CEO, Piyush Gupta responded saying: “the bank convened a special board Committee to oversee a full review of our technology resiliency with an independent external expert” … “We will complete the review as a matter of utmost priority and implement all recommendations expeditiously”.

CAST joins the Green Software Foundation

CAST, the Paris-headquartered software company, has announced that it has joined the Green Software Foundation (GSF), an industry organisation which it claims will bring “software intelligence to help partners and clients make their software more sustainable”. 

The GSF was launched in 2021 by GitHub, Accenture, Microsoft, ThoughtWorks and the Linux Foundation and is a non-profit organisation that aims to develop standards, tooling and practices for building green software, and foster shared commitment to sustainability.

Commenting on the announcement, CAST vice president Greg Rivera said that joining the organisation: “Couldn’t be timelier given the increased demand for enterprise sustainability in modernization and digital transformation initiatives”.  

“We see green software becoming a standard practice for more and more organisations and their development teams when devising new applications”. 

The move follows the launch earlier this year of CAST’s “Green Software Insights” platform, which analyses code repositories and identifies inefficiencies which cause excessive energy consumption and have scope for optimisation. They claim that this results in “lower energy expenditure and greenhouse gas emission with more economical, resilient, and efficient software.”

More information available here

ECB: Digital transformation requires strong governance

The European Central Bank (ECB) has outlined its views on regulatory requirements for the digital transformation of financial institutions. In an article, the ECB stated “Digital transformation requires strong governance and steering”, builds upon a 2022 survey of the digital transformation efforts of banks and a series of on-site inspections conducted by the ECB.

In the report, five key observations were highlighted:

  • European banks lack the indicators necessary to assess the impact of their digital initiatives. They claim that this inability to assess financial impacts puts banks at risk of sub-optimally allocating resources.

  • Decisions on launching new digital products or services made by banks could be better supported by comprehensive analyses.

  • Digitalisation strategies and policies often lack “appropriate approvals and progress reports” to ensure effective steering. However the report commended the up-skilling of management bodies, better equipping them to oversee digital transformation.

  • Most banks use Agile project management in their digital transformation projects.

  • There is a disconnect between projected financial cost savings per digital initiative, which are based on the on-time and within budget delivery of project milestones, and the agile project management strategies adopted which are inherently flexible, allowing room for delays, overruns and replanning. The report claims that this disconnect is widening overtime and that there is “no lessons learned process to feed back into future financial plans.”

Full news release available here


G7 to hold first meeting on AI regulation

Group of Seven (G7), the intergovernmental political forum consisting of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, has announced that it will meet to consider problems posed by generative AI tools, such as artificial intelligence research lab OpenAI’s ChatGPT.

In recent months generative AI, which utilises large language models to generate new and unique content based on patterns in training data, has become increasingly prevalent and has integrated into a broad range of software product offerings.

Leaders of the G7, also agreed to the creation of an intergovernmental forum, which is called the Hiroshima AI Process, to debate AI-related issues.

Full article available here


EU steps closer to world’s first rules on Artificial Intelligence

The European Internal Market Committee, which is responsible for the legislative oversight and scrutiny of EU rules on the single market, and the EU’s Civil Liberties Committee, which is responsible for protecting civil liberties and human rights, have adopted a draft negotiating mandate on the world’s first ever Artificial Intelligence rules. The draft aims to ensure that AI systems are: “Overseen by people, are safe, transparent, traceable, non-discriminatory, and environmentally friendly”. 

A vote of the entire European Parliament on the outlined proposals is expected during the 12-15th June parliamentary session.

More details available here


UK competition watchdog to investigate AI

The Competition and Markets Authority, the UK’s competition regulator, has launched an initial review of AI models. The investigation, which will focus primarily on large language models and generative AI (the technologies underpinning tools such as Open AI’s Chat GPT), comes in response to the UK governments request for regulators to consider “how the innovative development and deployment of AI can be supported against five overarching principles: safety, security and robustness; appropriate transparency and explainability; fairness; accountability and governance; and contestability and redress.”

This initial review aims to:

  • Examine how the competitive markets for foundation models and their use could evolve

  • Explore what opportunities and risks these scenarios could bring for competition and consumer protection

  • Produce guiding principles to support competition and protect consumers as AI foundation models develop

Full details available here


[Image Source: DBS Bank]