IT modernisation: What regulatory requirements apply to banks and insurance companies?

In this article, we highlight four key regulatory challenges that should prompt banks and insurance companies to modernise their IT landscapes: DORA, ReMark, BAIT and VAIT.

1 DORA: Strengthening digital operational security

The Digital Operational Resilience Act (DORA) is one of the latest regulatory measures aimed specifically at digital operational security. DORA requires financial institutions to design their IT systems to be resilient to cyber-attacks and other operational risks.

Legacy systems, which are often based on outdated technologies, are particularly susceptible to security vulnerabilities and failures. Modernisation towards more robust, cloud-based infrastructures can significantly improve security and availability. It also enables a faster response to threats and more effective implementation of security measures required under DORA.

2 ReMark: Efficient reporting and traceability

ReMark (Reporting and Marking) establishes a comprehensive framework for reporting and traceability in the financial sector. This requires detailed and transparent reports on financial transactions that can be tracked seamlessly.

Legacy systems are often unable to provide the high data quality and consistency required for proper compliance with ReMark. By modernising their IT infrastructure, banks and insurance companies can ensure that their data can be processed and analysed in real time. This not only facilitates compliance, but also improves decision-making and risk management.

3 BAIT: Requirements for the IT of banks

The German Federal Financial Supervisory Authority (BaFin) has issued clear guidelines for the operation of IT systems in banks in the form of the Banking Supervision Requirements for IT (BAIT). BAIT covers aspects such as IT governance, information security and the management of IT service providers.

Legacy systems often do not fulfil these requirements adequately. Modernisation makes it possible to implement modern governance and security practices that comply with BAIT requirements. This includes the use of advanced security tools, automation of compliance tasks and the implementation of comprehensive monitoring mechanisms to ensure continuous compliance.

4 VAIT: IT requirements for insurance companies

Similar to BAIT for banks, BaFin has introduced a set of rules for insurance companies in the form of the Insurance Supervisory Requirements for IT (VAIT). VAIT stipulates how insurers must organise, monitor and secure their IT systems.

Old IT systems can only fulfil these complex requirements with difficulty. By modernising their IT landscapes, insurance companies can not only comply with the VAIT requirements, but also benefit from increased flexibility and scalability. Modern systems make it possible to react quickly to market changes and offer innovative services that meet customer needs.

Conclusion: The need for modernisation

The modernisation of legacy systems is not an optional upgrade for banks and insurance companies, but an absolute necessity in order to meet current and future regulatory requirements. DORA, ReMark, BAIT and VAIT are just some of the many challenges facing the financial sector. By implementing modern, flexible and secure IT infrastructures, companies can not only minimise compliance risks, but also increase their operational efficiency and innovative strength.

The transformation may seem complex and costly, but the long-term benefits far outweigh the short-term investment. At iSYS, we help banks and insurance companies modernise their IT systems and future-proof their operations. Contact us to find out more about our customised solutions and start on the path to digital transformation.

Download our white paper and find out how you can effectively approach the modernisation of your legacy systems.

Are you planning a project and need support in modernising your legacy systems? Get in touch with us! We look forward to hearing from you!