IBS Journal May 2016
47
outset and measure them against realistic KPIs. They need to find the optimum balance between insourcing and outsourcing, and team location is key with successful programmes having a degree of localised presence.
From a funding perspective, visibility of the effectiveness and efficiency of software delivery will improve the way funds are spent. However, this must be paired with strong leadership that holds a deep-rooted knowledge of system and IT infrastructure to ensure that high-quality, robust systems’ delivery is the end result.
IBS Journal: It has been said that creaking legacy IT systems are making it easy for cyber criminals to let themselves into the inner workings of financial transactions, data and personal information. How much
of an issue is this?
CD: The regularity of press headlines focusing on hacked data confirms that this is an issue faced by all manner of companies, not just banks. The ubiquity of our financial and personal data across the internet means that the threat of cyber criminals is not simply a problem for financial institutions, but also retailers, subscription services and technology providers.
The recent denial of service attacks on HSBC caused significant disruption without major financial losses. Legacy IT systems tend not to play a part in this kind of attack, but they do in other types of attack. Recently, there was a big case where malware was used to infiltrate back-end systems and feed information to criminal syndicates in China, Russia and Europe. This attack was estimated to have led to over $900 million in stolen funds. Whilst attacks of this size are not yet common, they are likely to become more prevalent as the industry continues to open up more channels for banking. This includes obvious interfaces such as online and mobile, as well as less obvious API channels for third party integration.
As it stands, therefore, creaking back office systems are no less secure than new systems. Both types of system require implementation of respective security features but testing these security systems is often left until the end of a project. The result is either a re-design or acceptance of vulnerabilities – concerning when you consider that the Lloyd’s insurance market has estimated that cybercrime cost organisations over £200 billion in 2015. This represents a fourfold increase
Whilst much of their technology is obviously new, such as biometrics and mobile interfaces, they remain dependent on certain aspects of the same legacy infrastructure as the larger banks, for example payments gateways. When considering the threat from challenger banks, the banking infrastructure needs to be viewed in its entirety and challenger banks cannot escape technology-related risks. Indeed, these risks are perhaps heightened by the scale and pace of programme delivery, though as more new banks come online, these risks will diminish as vendors and delivery teams become well-versed in the necessary success factors.
In addition, much has been written about current account switching and the reasons customers switch, or do not switch, as is more often the case. New banks will only be successful if customers have compelling reasons to choose them, and these are likely to be financial rather than technological, e.g. better interest rates. If the rate of cyber crime worsens, this could change and banks with the most robust security and technology will stand out from the crowd. For a new entrant who can show their technological superiority in this environment, there is every likelihood it will become an established bank itself, or at least be bought by one.
For now, public interest is very high and the big banks are taking notice. Expect revitalised offerings from the established banks, particularly across digital channels, as well as acquisitions or part investments in the challengers as the big players look to join the revolution.
www.ibsintelligence.com
since 2013, and some predictions estimate this figure to increase to £1.4 trillion by 2019. With evolving technology and collaboration in this space, particularly open APIs and shared ledgers, firms must strive to improve IT security, be it in front or back office.
IBS Journal: A number of challenger banks are emerging, looking to take a piece of the retail banking market. How successful have they been in terms of building new banks with new systems and should the established banks be
worried and look to learn from these new entrants?
CD: Challenger banks appear to be everywhere at the moment, though they are all at different stages in their journey. With many still in the build stage, it is too early to tell what kind of impact these firms will have.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60
