The financial services sector must improve their operational resilience

The financial services sector is currently witnessing a battle between old and new for market share, as incumbents go head-to-head with seemingly tech-savvy challengers. Yet despite this popular narrative, both older, ‘bricks-and-mortar’ firms and their digitised younger counterparts have been plagued with outages, highlighting that companies across the spectrum are falling short on operational resilience.

The increase in both the frequency and severity of outages has led to widespread criticism of the financial sector’s ability to deliver key services, with the FCA recently announcing new industry requirements around operational resilience set to come into play later this year. This comes after retail banks in the UK reported more than one outage a day in 2018, with outages at TSB and Barclays dominating headlines.

The root causes are numerous but also, for the most part, easily solvable. On the one hand, you have companies overly reliant on legacy technology, having failed to upgrade their systems as their IT estates evolved. On the other hand, you have incumbents and challengers alike rushing to stay competitive with Big Tech by using DevOps to onboard rapid changes. The common thread here is clear: financial services firms are being thwarted by a lack of prioritisation and planning around operational resilience.

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The more you look into it, the more evident this lack of planning becomes. Too many times throughout 2019 we saw firms taken down by simple updates and migrations, having failed to have a back-up plan in place if something went wrong or overran. Meanwhile, many still aren’t aware of the headroom within their IT systems, meaning they have no idea at what point the capacity of their IT infrastructure will reach critical overload.

Thankfully, there are a number of different solutions available to counter these problems. One simple solution, that should form the bedrock of any strategy, is a proper change management strategy. When enacting system changes and updates, there must be a plan in place in the event of an issue. Sixty per cent of outages could be avoided if there is a system to fall back on.

Another basic but critical way to avoid outages is stress testing. Stress testing ensures that a company knows the outer limits of their systems capabilities. Not only is this crucial when it comes to expansion, as companies will be able to ensure their growth is matched by their IT capabilities, but also allows companies to plan for worst case scenarios as they will know when their system hits breaking point.

Firms must also ensure that they are proactively monitoring their IT estate round-the-clock, allowing them to become aware of problems faster and implement solutions before the potential impact grows.

With new regulations on the horizon and the financial c-suite set to personally come under the hammer for IT failings, it’s going to be less and less acceptable for firms to simply apologise following an outage and move on to business as usual. All firms need to make sure they are operationally resilient now to avoid potentially fatal outages further down the line.

Written by Guy Warren, CEO, ITRS Group

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