Prior to these innovations, institutions could be generally compartmentalized into market segments that did not directly compete with one another. Government regulation mirrored and reinforced this segmentation. With financial innovation came new levels of competition, which then caused pressure for government to change the rules of play. As a result, the legal strictures preventing banks from engaging in certain businesses are being loosened.
This rule is also a good example of efficient regulation, since bank service providers are often best positioned to identify computer-security incidents. Since May 2022, banks and bank service providers have been required to comply with the computer-security incident notification rule.