The guidelines now serve as a framework for protecting customer information, ensuring reliable service delivery, and fostering a secure digital ecosystem. One of the main focal points in the guidelines is the importance of financial institutions establishing thorough risk management frameworks. These frameworks should be designed to cover a broad range of cyber risks, including data breaches, insider threats, phishing attacks, ransomware, advanced persistent threats and malware infections.
The regulations now require all regulated entities in financial services to give priority to developing and implementing strong cyber and information security control measures, such as continuous security monitoring, privileged access management, endpoint detection and response, database activity monitoring, data encryption protocols, multifactor authentication, and intrusion detection systems among other controls. Additionally, the regulations require regular security assessments and audits to be conducted for proactive identification of controls gaps and vulnerabilities for prompt resolution.
The guidelines emphasize the role of effective governance in ensuring the security of digital financial services. Traditionally information and cyber security functions have been reported into Information Technology leading to low cyber and information security maturity. The Central Bank has provided detailed guidance that financial institutions must establish clear roles and responsibilities for managing cyber and information risks that are segregated from IT-related roles, including assigning a dedicated cybersecurity team and ensuring that top-level management is actively involved in overseeing security measures.
Strong governance is essential for guaranteeing cyber resilience and safety of digital financial services. It is crucial for financial institutions to establish distinct roles and responsibilities for handling cyber and information risks separate from IT-related tasks. This includes appointing a dedicated cybersecurity team and ensuring that senior management actively oversees security programs for effectiveness and relevance to the organization. By doing so, there will be clear accountability and responsibility in managing cyber risks, along with sufficient resources allocated towards addressing these challenges.
Financial institutions have a crucial role in safeguarding customer and counterparty data. Implementing effective security awareness and training programs for counterparties, customers, employees, and other stakeholders is now required as best practices. As more stakeholders are held accountable for upholding strong privacy standards, regulated entities will help prevent unauthorized access, data breaches, or manipulation of data within the institution’s systems arising from stakeholders involved in the digital financial services ecosystem.
Designing digital financial services to ensure minimal service disruptions and high reliability is now more critical due to the impact that outages have on the customer. Customers should have the convenience to access their accounts and conduct transactions seamlessly through available digital channels. The new cyber and information risk management guidelines have emphasized the importance of minimizing downtime and providing reasonable response times to customer requests, thereby enhancing user satisfaction and trust in digital platforms.
Effective monitoring of transactions and maintaining a comprehensive audit trail is now crucial for detecting and addressing fraud risk and suspicious activities. Regulated entities are expected to implement systems that flag suspicious transactions and maintain a detailed record of all financial activities, facilitating timely investigation and forensic analysis when necessary. To prevent unauthorized transactions on customer accounts, users should be prompted to verify transaction details before execution. This step ensures that the intended beneficiary and amount align with the user’s intentions, reducing the risk of errors or fraudulent activities. To fortify the authentication process and authorize transactions securely, regulated entities are now mandated to implement Multi-Factor Authentication (MFA). A combination of factors such as passwords, biometrics, tokens, or one-time codes must be used to add the vital layer of protection against unauthorized access.
Regulated entities are required to maintain open communication with their customers by providing clear and concise information about the security measures in place. Users should be informed about the safeguards, responsibilities, and potential risks associated with digital financial services, fostering transparency and accountability. It is now essential for all parties involved the interconnected digital financial services ecosystem to clearly define their responsibilities and security obligations. This collaborative approach will ensure that the entire service chain remains secure and resilient. To aid incident response, fraud investigations and compliance with relevant laws and regulations, regulated entities must retain sufficient and relevant digital service transaction logs. Digital logs serve as a valuable resource for tracing the origin and nature of transactions, facilitating both preventative measures and post-incident analysis.
The Bank of Zambia’s Cyber and Information Risk Management Guidelines (2023) offer a comprehensive framework for ensuring the security of digital financial services. By prioritizing confidentiality, reliability, user authentication, transaction monitoring, and transparent communication, regulated entities can build a secure and trustworthy environment for their customers. Adhering to these guidelines not only safeguards sensitive information but also reinforces the foundation of digital financial services in today’s rapidly evolving technological landscape.