Imagine you are traveling in Europe and want to use your credit card to pay for a big hotel bill.
It is rejected for some reason, so you go to your banking app to see if there is enough cash in your account to use your debit card. But you cannot access your account. Sound frustrating?
When money-related things (credit cards, bank apps) don’t work, customers tend to vote with their feet – they either complain (a lot) or change providers. In April, when London bank TSB’s online banking and app services were down for five days in a row, 1.9 million people were without service. Eight weeks later there were still issues with their accounts, and they were again locked out on July 10th. So far, the bank has lost over 12,000 customers. Also, in June, Tesco Bank's online and mobile banking services were down for about four hours, and Visa’s payment systems in Europe suffered a serious outage.
UK banking regulators are having none of it. The Bank of England, the Prudential Regulation Authority and the Financial Conduct Authority called for banks to report on their exposure to risk and to outline contingency planning for disruptive outages. They will now be required to have backup plans in place to enable full recovery within two working days.
The regulators said that “operational resilience is a vital part of protecting the UK’s financial system, institutions and consumers.”
They suggested that the banks approach the concept by:
- Focusing on the continuity of the most important business services as an essential component of managing operational resilience
- Setting board-approved impact tolerances which quantify the level of disruption that could be tolerated
- Planning on the assumption that disruption will occur as well as seeking to prevent it.
Operational resilience requires transparency into business processes and IT systems. The more control your bank has its over processes, and the greater visibility your bank has into the interconnectivity and dependencies of IT systems, the faster and more effectively you can respond to disruptions of any kind.
Of course, banks have risk in their DNA. That’s what drives margin. However, incurring the wrong kind of risk can lead to penalties – and even worse - personal liability, stock price hits, and damage to brand and franchise.
Banks need smarter technology and processes to gain a 360-degree view of business and IT. A strategic approach to business and IT transformation not only can provide the visibility for operational resilience in the face of disruption, it will accelerate the bank’s ability to innovate with agility and confidence.
Be prepared for whatever risks digital transformation might throw your way. Click below to learn how to transform your bank’s approach to risk management into a source on ongoing competitive advantage.