In an awesome piece of news for banking tech vendors, bank IT systems are set to come under the regulatory microscope in 2013/2014 as the UK’s Financial Conduct Authority
identifies technology risk as a key area of focus for the coming year.
Recent outages at RBS and the technology problems that have bedevilled the Co-op Bank raises questions over whether current systems are adequate to handle a new era in digital banking.
The effectiveness of technologies may be limited by shortcomings in the way in which systems are designed and managed,” says the FCA. “There are also some slower-burning issues resulting from the increasing complexity of systems needed to support required data processing and transaction levels that could create future problems across different markets. Vulnerabilities are especially evident where the quality of infrastructure is low. This is mostly the case for ageing, legacy or multi-layered/integrated systems, or where previous failures have been plugged with manual workarounds affecting cost issues and control risks.”
Other areas of concern arise from the risks presented by cybercrime and an over-reliance on third party and outsourced systems.
The FCA, in conjunction with the Prudential Regulatory Authority and the Bank of England, has vowed to conduct a major year-long review into how well UK banks and building societies are managing their exposure to technology risk issues and the adequacy of their IT systems in general.