New contingency protocols for high-value payment systems in Chile are credit positive for local banks because they will improve security and help restore customer confidence following a series of highly publicized cyberattacks targeting the country's financial sector, according to Moody's.
The security protocols were published in late August by Banco Central de Chile, which said the initiative aimed to "strengthen the integral management framework of risks and safeguard the operational continuity of high-level payments made between banking companies" when faced with cyberattacks.
The announcement followed a cyberattack at Banco de Chile in May and, more recently, a data breach at state-owned Banco del Estado de Chile.
Chilean authorities will require banks to perform a string of cybersecurity and cyberattack tests and simulations before the end of 2018, Moody's said, adding that this period may be extended if needed.
"In addition to the new protocols, Chilean banks will need to continue investing heavily in cybersecurity to restore public confidence in the banking system's ability to protect their information," Moody's said. Although the new protocols will raise operating costs for lenders, the rating agency expects the costs to be offset by gains from the closing of traditional brick-and-mortar branches and through the modernization of digital banking services.
Chile's government is drafting a cybercrime bill that is expected to be sent to Congress soon. Meanwhile, banking regulator SBIF recently introduced changes on cybersecurity rules to improve incident reporting among banks, including a requirement for banks to "designate an executive level manager" to communicate with the watchdog.