Why Internal Controls Are Making a Comeback in 2023
A Look at User Permissions, 2FA, and Regulator Scrutiny
2023 will see a renewed focus on internal controls for bank accounts and payment services. The obsession over User Experience has led to many controls being removed over the past few years by banks and Fintech alike. in 2023 we will see more focus on user permissions and 2FA. At Narvi we are implementing new user roles for our banking App to allow for more checks and balances for large teams. We also see many regulators for example the Estonian- FIU requiring their licensed entities to have more internal controls such as splitting the roles of payment creators and payment approvers.
Overview of upcoming changes
Internal controls are important for any financial institution, as they ensure the accuracy, reliability, and integrity of financial transactions. In the past few years, there has been a focus on improving the user experience for banking and payment services, which has sometimes resulted in the removal of certain controls. However, in 2023, there is likely to be a renewed focus on internal controls, particularly in regards to user permissions and two-factor authentication (2FA).
One reason for this renewed focus is the increasing prevalence of large teams in the financial industry. These teams often have complex hierarchies and different levels of authority, which can make it difficult to keep track of financial transactions and ensure that they are being carried out correctly. By implementing new user roles and permissions within their banking apps, financial institutions can better manage these complex organizational structures and ensure that there are sufficient checks and balances in place.
Another factor driving the increased focus on internal controls is the growing scrutiny from regulators. For example, the Estonian Financial Intelligence Unit (FIU) has recently required its licensed entities to implement additional controls, such as splitting the roles of payment creators and payment approvers. This helps to ensure that there is a separation of duties, reducing the risk of fraud or errors occurring.
One of the key ways that financial institutions can improve their internal controls is through the use of 2FA. This involves requiring users to provide two forms of authentication before they can access certain features or make financial transactions. This can include something they know (such as a password or PIN), something they have (such as a security token or smartphone), or something they are (such as a fingerprint or facial recognition). By requiring multiple forms of authentication, financial institutions can significantly reduce the risk of unauthorized access or fraudulent activity.
At Narvi, we are already taking steps to implement new user roles and permissions within our banking app. We believe that this will help us to better manage large teams and ensure that there are sufficient checks and balances in place to protect the integrity of our financial transactions. We also encourage other financial institutions to consider similar measures, as we believe that this will help to improve the overall security and reliability of the financial system.
In conclusion, 2023 is likely to see a renewed focus on internal controls for bank accounts and payment services. This will be driven by the need to better manage large teams and the increasing scrutiny from regulators. By implementing measures such as new user roles, permissions, and 2FA, financial institutions can improve the integrity and reliability of their financial transactions, as well as enhance the overall security of the financial system.