XN000022-1990-09-27 — Page 2

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THURSDAY, SEPTEMBER 27, 1990

INFORMATION TECHNOLOGY PLAYS KEY ROLE IN BANKING

TO FULL,

THE GOVERNMENT IS AS FIRMLY COMMITTED AS THE BANKING SECTOR EXPLOITING THE BENEFITS OF INFORMATION TECHNOLOGY ("IT") TO THE THE ACTING FINANCIAL SECRETARY, MR DAVID NENDICK, SAID TODAY

(THURSDAY).

THAT

IT IS ALSO AS COMMITTED AS THE BANKING INDUSTRY BANKING SERVICES PROVIDED TO THE GENERAL PUBLIC ARE EFFECTIVELY ENHANCED, MR NENDICK ADDed.

SAFELY

TO ENSURING AND

HE POINTED OUT THAT STAFF OF THE OFFICE OF THE COMMISSIONER OF BANKING HAD ATTENDED A NUMBER OF ADVANCED COMPUTER AUDITING COURSES TO ENHANCE THEIR UNDERSTANDING OF LATEST MARKET TECHNOLOGIES AND PRODUCTS AND THEIR APPLICATION IN BANKING BUSINESS AND AUDITING.

SPEAKING AT THE FINANCIAL INFORMATION TECHNOLOGY SYMPOSIUM THIS MORNING, MR NENDICK SAID THAT IN HONG KONG "IT" HAD ALREADY ASSUMED AN IMPORTANT ROLE IN BANKING SUPERVISION, PARTICULARLY IN THE LIGHT OF THE NEW AND MORE FLEXIBLE APPROACH WHICH HAD BEEN ADOPTED ΤΟ SUPERVISING BANKS.

AN

"THIS APPROACH LAYS IMPORTANT EMPHASIS ON AN OFF-SITE REVIEW OF INSTITUTION'S FINANCIAL AND STATISTICAL RETURNS WHICH IS THEN FOLLOWED UP BY PRUDENTIAL INTERVIEWS WITH MANAGEMENT ON MATTERS OF PRUDENTIAL CONCERN.

"CLOSE ATTENTION IS PAID TO SUCH FACTORS AS LIQUIDITY, CAPITAL ADEQUACY, LARGE EXPOSURES AND OTHER RISK CONCENTRATIONS, HE SAID.

...

MR NENDICK NOTED THAT THERE WAS A NEED FOR AN ENHANCED COMPUTER SYSTEM CAPABLE OF MAINTAINING A LARGE DATABASE AND AT THE SAME TIME SUPPORTING THE MUCH LARGER NUMBER OF TERMINALS AND INTELLIGENT WORKSTATIONS NECESSARY FOR THE REGULAR DETAILED REVIEW OF THE

FINANCIAL POSITION OF INSTITUTIONS BY INDIVIDUAL BANK EXAMINERS.

TO THIS END, THE OFFICE OF THE COMMISSIONER OF BANKING RECENTLY ENTERED INTO A $32 MILLION CONTRACT FOR THE SUPPLY OF AN ENHANCED COMPUTER SYSTEM WHICH IS PLANNED FOR COMPLETION IN APRIL NEXT YEAR.

THE SYSTEM WILL PROVIDE THE TECHNICAL BACKUP TO THE DEVELOPMENT THE NEW SUPERVISORY APPROACH REQUIRING AS IT DOES MUCH GREATER ANALYSIS OF DATA PROVIDED BY INSTITUTIONS.

OF

MR NENDICK CAUTIONED THAT THOUGH "IT" WAS HELPING BANKING BUSINESS TO EXPAND ITS FRONTIERS, SUCH TECHNOLOGY HAD ALSO EXPOSEL TYP INDUSTRY TO OPERATOR UNCERTAINTY AND RISK IN CERTAIN RESPECTS.

"BANKS MUST INCREASINGLY BE ON THEIR GUARD AGAINST SUCH PROBLEMS AS THE IMPROPER DISCLOSURE OF INFORMATION, COMPUTER FRAUD THE INTERRUPTION OF BUSINESS DUE TO SYSTEM BREAKDOWN," HE SAID.

OR

/HE SAID