The banking industry has come a long way in the manner in which it operates today, more so in the recent past, where automation is driving the key changes in the industry. Automation through technology has played an instrumental role in easing the performance of critical and day-to-day operations of the customers, employees, and the financial institutions.
During the last decade, financial institutions applied IT to a wide range of their back and front office tasks, in addition to a great number of new products. With the improving IT infrastructure, banks have also been able to provide the customers with electronic banking operations, ATM operations, telebanking, remote banking, and self inquiry facilities. IT has become the backbone for all critical activities of today’s financial institutions.
Hence, the consistent availability of these IT services is a must for these organizations to be up and running all the time. The consistent availability of IT services is a challenging goal. In the financial services industry, IT infrastructure is about high-speed transaction processing and the ability to maintain that speed throughout variations and unpredictable surges in transaction volumes.
However, IT services are vulnerable to several day-to-day disruptions and risks. The disruptions can have unwanted repercussions. For instance, if a bank’s ATMs stopped giving cash and all the employees decide to go on a strike – the bank’s customers, in desperate need of cash, will be disappointed and will never remember the bank for a good reason; most of them will not forgive their banking services provider and move businesses to other banks. This would lead to bad branding and loss of stakeholders’ trust.
To add to the misery, regulators could decide to impose penalties on the bank and land the institution in legal complications. The aforementioned scenario is easily avoidable by planning ahead of time and embedding the ethos of Business Resiliency in the DNA of organizations. It is important to acknowledge the fear of the unknown and the probable events that could stall the operations. It is important for banks and other financial institutions to be very clear about the role of IT during events so that there is no mismanagement during operational risk events.
IT departments today have enough in their platter to worry about, ensuring seamless business-as-usual while dealing with day-to-day technical disruptions. The technology issues which are dealt by the helpdesk are not threats to business operations, unless a major failure escalates into a crisis. With changing times, risk prevention or mitigation is driven from the top. In many cases, business continuity and availability management sponsor have direct line reporting to the Country Executive Head or Regional Head, depending on the span of control.
The fact that earlier business resiliency was merged into IT cannot be denied but given the business expectations on Service Level Agreement or Minimum Business Continuity Objective, resiliency planning & execution is done by the organization’s general management and not IT, anymore. This has led to a lot more focus on business continuity and service availability in the form of investments both in resources and tools. There is more visibility now; in fact, due to the synergies in many banks, business resiliency has got merged with Operational Risk Team as a part of their portfolio. Financial institutions invest significantly in sophisticated network technology to achieve improved performance at microsecond levels because performance and transaction latency are critical success factors.
Despite these investments, there is still a lack of granular, accurate, or comprehensible information on where to focus latency reduction efforts to improve overall performance of order execution flow. Financial Institutions should work on building and strengthening the existing business resiliency framework that may exist. There is a need to ensure high availability and centralized management across the financial institutions’ numerous applications and heterogeneous platform technologies for branch applications, call centers, payments and trading operations, and other core banking system.
The service availability plans of the financial institutions should ensure eliminating impact of planned downtime – such as upgrades and maintenance operations – reducing impact of unplanned downtime, and reducing operations costs through a standardized platform.
By Rohil Sharma
CEO and Founder, Perpetuuiti Technosoft