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Technology is not the barrier to progress, but will in fact drive improvements in performance across the financial services industry.

As technology problems entered their second day at HSBC, Rt Hon. Andrew Tyrie MP, Chairman of the Treasury Committee, made the following comment:

“Barely six months after the last glitch in their under-performing IT systems, HSBC is apologising again to its customers.

“The frequency of these failures across the financial services sector suggests a systemic weakness in IT infrastructure. This is concerning.

“I will be asking the Chief Executive of HSBC, and the regulators, for an explanation of these failures, and action taken to sort them out. They just keep coming.”

techUK has been highlighting for some time the challenges that the banking sector faces in transforming to fully digital institutions, most recently in Taking the Initiative: Leading with Technology in Financial Services. techUK does not underestimate the effort needed to break the cycle of trying to repair and maintain deeply complex old systems. The large costs of technology renewal are because of this existing complexity.

Those challenges, however, are not insurmountable and we have continued to reiterate the need for financial institutions to:

• Move faster: Strive for a more decisive and faster rate of change. Senior management needs to accelerate the transformation of their operations, informed by a clear vision of the organisation's long term goals.
• Embrace and accelerate the use of industry utilities. Capabilities that do not offer differentiation should be outsourced or transferred to industry utilities.
• Build a more structured approach to technology renewal, focusing on the use of cloud services and the more effective use of data to deliver an improved end-customer experience.
• Work alongside the regulators. Tech suppliers and financial institutions must engage with regulatory authorities to fully realise the benefit of using new, especially cloud-based, technologies.

We continue to explore each of these recommendations though the work of the techUK Financial Services & Payments Programme and whilst much remains to be done, progress is being made. Collaboration will be key: government, the regulator, incumbent financial institutions and innovative technology firms will each have an important role in creating a more resilient and competitive financial services sector.

Lisa Moyle, Head of the Financial Services & Payments Programme noted, “Widespread outages are a concern and a timely reminder of the challenges that remain. However, it is important to note that technology is not the barrier to progress, but will in fact drive improvements in performance across the financial services industry. It is only by embracing technology that traditional providers can meet the demands of their customers in today’s digital world. We have seen a wave of new challenger banks enter the sector and an increased readiness from the established institutions to work in collaboration with innovative technology firms.”

Keith Saxton, Chair of the techUK Financial Services Programme, discussing with Finextra how the problem of banks' legacy systems is not going away and must now be dealt with, and looks at some the technologies that will play a key role in that renewal.