The China Banking Regulatory Commission (CBRS) brought out last month new regulations to make online banking more safe. But foreign banking institutions and IT vendors fear exclusion from the China market, and they might be correct, writes Shanghai-based lawyer Mark Schaub in China Law Insight. His take-away.
Banks and financial institutions operating in the PRC will have little option but to comply with the reporting requirements and will likely take a “wait and see approach”. They will no doubt have their issues with suppliers and integration with current systems but in the end they will need to do CBRC’s bidding.
However, MNC software/hardware/service vendors will not be able to have the comfort of such a fatalistic approach. Indeed it will be very difficult for a MNC vendor to have much comfort at all from reading the CBRC Guidelines.
Vendors will have multiple concerns including loss of competitiveness in the PRC marketplace (a large and ever growing market), erosion of their IP, forced marriages with PRC partners and perhaps the greatest concern of all – that the regulations in the banking IT sector only represent a thin edge of the wedge. The greater concern is that such a policy may be rolled out to other sectors such as insurance, ecommerce, automotive etc.
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