Said Tabet, Lead governance risk and compliance strategy at EMC
I was interested, yet not surprised, to read over the weekend that Britain’s banks were told by the Prudential Regulation Authority that they needed to spend billions overhauling IT systems over the next few years.
The news won’t be a surprise to our banking institutions, as financial services IT systems were not designed to face today’s challenges, risks, and the need for agile, customer-oriented systems. Many of these systems were built for the first ‘mainframe’ platform of computing, or the client-server “second platform” of computing. The new ‘third platform’ of computing calls for far greater agility; responding to staff and consumer demands for anywhere access to data and services on the move, to call on data repositories to translate information into insight, to react in near-real-time to customer expectations as expressed on social media.
In order to meet new demands, some might suggest that we should consider rebuilding our systems from scratch with these requirements in mind. But will that solve the problem? Perhaps for the short term, but definitely not when you take a longer term view. Replacing one monolithic framework with another is not the answer. We need an information infrastructure that can cope with change.
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After all, the world we live in is changing rapidly and information technology needs to be adaptive, agile, and ready to face up to the most complex situations. Cyber security risks are just one of those. Internal controls, governance, enterprise risk management, alignment of business goals and objectives to operations and IT…these all require serious attention. It’s also become clear that if you don’t adapt and update your IT infrastructure to meet with the increasing demands being placed on it by employees and customers, then in the long term you won’t be able to compete in your industry. Our financial institutions should also consider how modern, agile IT can also drive new business opportunities, customer insights and revenue opportunities.
I would recommend that business leaders at our financial institutions make IT an urgent priority for this year to ensure they meet both customer and market demands, and are ready to support the mobile, social, cloud-centric ‘big data’ rich ‘third platform’ of computing. Technology is shaping our advances now more than ever, and it is time to invest in systems which will underpin your business as a whole for the future. Avoiding short term CapEx in the interest of cost savings could well result in long term losses and the eventual decline of any business. Regulators and national supervisors also need to take responsibility in developing adequate, standards-based frameworks in order for them to help stabilise the financial system of the next 20 to 50 years, and perhaps have the luxury then to mitigate in the new systemic risk scenarios that we will face in a timely fashion.