Regulators’ statement on the risks of upgrading computer systems should not deter financial institutions from upgrading their IT systems, says software innovator TmaxSoft
In the wake of the TSB IT debacle, the Bank of England (BoE) and the FCA have given financial services firms three months to explain how they would deal with technology failure.
The discussion paper outlines the importance of operational resilience and warns that banks could face fines if service disruptions lasts longer than two days. The regulators also caution that upgrading computer systems could lead to service disruption.
For many financial institutions, upgrading their IT systems is their only viable route to survival, as it enables them to compete with the uprising of challenger and digital banks. Therefore, their ability to safely and securely upgrade their systems is a crucial investment linked to creating significant operational efficiencies for the IT department and ultimately the whole organisation. Additionally, these IT migration projects are seeking to provide customers with a seamless and convenient mobile and web banking services that meet the demands and expectations of a 21st century customer.
Discussing the FCA’s and BoE’s guidance paper, Carl Davies, CEO of TmaxSoft UK says: “Even before we started to see IT disasters play out in the public domain, due to the level of risk involved in largescale migrations, many IT leaders and CIOs have been delaying implementing their digital transformation projects. And now, with the FCA’s and BoE’s warning, these anxieties are likely to be heightened further still. This move will discourage the financial sector from taking on the change programmes they need to survive. At this stage, many traditional financial services firms should be making the necessary steps to move away from the legacy technologies, such as mainframes, that hold them back.
Davies continues: “Although BoE and the FCA’s acknowledgement of risks involved in IT projects is important, companies can minimise the chances of disruption by taking the steps required. When it comes to moving away from mainframes, one of the riskiest tasks is altering programmes and applications, or re-writing code. Re-engineering systems can take years, which means that the scope for error is far-reaching. However, financial institutions have the option to re-host their mainframes, meaning that they can simply lift existing mainframe assets and shift them to new open platforms. Re-hosting is faster, less risky, and helps systems to operate in the exact same way, but many organisations still choose outdated strategies that put them at harm.
“Although there are risks involved in any transformative projectsIT Migration, both the FCA and BoE should inform firms that there is a light at the end of the tunnel. Organisations will be in a much stronger position once they have migrated to new systems, achieving the desired outcome and becoming a modern organisation that provides customers with personalised, seamless and uninterrupted services. Transformation does not have to be a dangerous journey. It is therefore imperative that any organisation that is considering a transformation project first identifies any gaps in their knowledge and works with the right partner to secure the smoothest transition possible.” Davies concludes.