Emerging trends in ICT, electronic banking and the legal environment

Rapid development in Information Technology and the liberalization of the telecom regulations has opened vast opportunities for global trade expansion as well as new employment opportunities.

This new environment requires safety plugs and the regulatory framework to ensure stakeholder interests are duly safeguarded. Recently the cream of Sri Lanka’s legal fraternity under the direction of the Information Technology Committee of the Bar Association of Sri Lanka (BASL) presented the National Information Technology Law Conference to a forum for the future in the complex ICT field. The conference covered vast areas such as IT software, telecommunications, outsourcing, electronic Banking, and intellectual property rights etc.

Following the Personal Computers (PC technology) of the eighties, the nineties saw a major transformation in the global telecommunication technology heralding the much-talked “Knowledge Economy”. The result was emerging new chapters in law and commerce with new key buzzwords such as outsourcing, off shoring, moving business into new horizons. Sri Lanka moving slowly in the cyber world received a kick start with the legal changes in 1991 that brought into existence the Sri Lanka Telecommunications Act and the Telecommunication Regulatory Authority (TRC) and the establishment of Sri Lanka Telecom. With the ending of years of state monopoly and the entry of private operators, connectivity viewed as a privilege or status symbol broke barriers and today the telecom industry has become one of the fastest growing industries providing momentum for growth.

Senior lawyer K. Kanag Iswaran explained the pecularities involved in transfer of ownership in software and the simplicity of doing so by a mere email attachment and the complexities involved in valuing so for purposes of customs duties..

Dr Harsha Cabral, a company law expert, elaborated how legal protection for IT software was introduced in Sri Lanka in 2000 through an amendment to the Intellectual Property Act. Sri Lanka also became obliged for software protection by becoming signatoris to the TRIPS (Trade related Intellectual property rights agreement).

The Intellectual Property Act No 36 of 2003 that became TRIPS compliant brought in several far-reaching changes to the cause of software protection.

Speaking further in detail on Intellectual Property, Dr Cabral added that all that emanate from the exercise of the human brain such as expressions of ideas, poems, inventions, desighns and even carton characters (quoting local example of famous “ Siribiris”) belongs to intellectual property. Intellectual property legislation has a careful task of fostering human creativity without unduly restricting dissemination of its fruits in any manner.

Intellectual property is an example of intangible personal property representing a collection of ideas and information in a broadly commercial context that the law recognizes as having a value and deserving protection. Sri Lanka is also follower of the World Intellectual Property Organization (WIPO) with success and the decided case law speaks highly of its successful development. Dr Cabral ended his presentation with the words “May the players in the software industry play the game clean! Nay the lawyers be the cleaners!” Prof. H M Zafrullah making his presentation in “Electronic Banking” said that the liberalization of the International trade started in the 1980’s followed by the globalization of the world economy giving a tremendous boost to the banking industry, this phase was followed by IT revolution facilitating cross border trade.

Today electronic commerce offers an inexpensive and direct way to exchange information and sell and buy products and services. These developments in turn had its impact on the banking sector who were pressurized to develop payment systems to provide for expanding economic activities brought about by the trade liberalization and globalization banking industry thus had to face vast challenges in expansion of trade as well as movement of people across the national boundaries.

In meeting these enormous challenges the banking industry had to invest heavily in ICT systems, we’ve seen this happening even in Sri Lanka with some of the indigenous banks meeting up to the competition offered by the foreign banks.

Electronic transfer of funds has greatly obliterated the need to carry money physically bringing in a cashless society. Some of the familiar electronic payment systems today are ATM cards, shared ATM’s credit and debit cards, telebanking, Internet banking etc. With increasing telecommunication facilities electronic banking could become more popular in Sri Lanka.

Though the Electronic Transactions Act No 19 of 2006 was enacted recently Sri Lanka has been slow in enacting legislation to meet challenges of the technological age.

Lawyer M.A.Sumanthiran in his presentation on Sri Lanka’s position in Electronic Banking stated that Sri Lanka has been slow to enacting legislation in the field of electronic banking but felt that the slow and steady approach is sensible and in any case the absence of specific regulatory mechanism has not prevented the use of new and latest methods of financial transactions taking place in the country.

The reason for that perhaps is that our fall back legal environment which is our common law and the law governing contractual relationships are versatile enough to deal with situations that could arise. Thus credit card companies have been able to recover default in dues using the existing legal system.

Credit card or electronic banking frauds have altogether not been absent in Sri Lanka.

There have been a number of frauds but the card operators have been prompt to detect some of these malpractices and alert the card holders to prevent large scale losses. We must not wait for big scandals to happen to take remedial action.

Apart from the legal profession the law enforcement officers too should be provided thorough training in this highly technical and dynamic area to combat electronic crimes.