Banking IT infrastructure has become increasingly critical as financial institutions depend on complex, interconnected systems to process millions of transactions securely and reliably. High-profile cyberattacks and system outages demonstrate how failures within these environments can disrupt customers, expose security vulnerabilities, and create substantial financial and reputational consequences.
As banks expand digital services and move toward omnichannel banking, legacy technology must support growing transaction volumes, increased connectivity, and more sophisticated security requirements. Modernizing the underlying infrastructure can help financial institutions improve resilience while providing the integration and monitoring capabilities needed for increasingly complex banking systems.
In April 2016, SWIFT became the latest financial institution to be at the centre of a systems failure scandal that saw thieves syphon $81 million from the Bangladesh Bank, in what looks set to be just one of many. The extent of the damage is still unknown, but SWIFT has warned customers that the malware imbedded to hide such fraudulent activities will have led to further losses.
But this is not an isolated event. In the UK, nearly all of the High Street banks have suffered recent major outages, impacting business and retail customers alike. For streams of business and customer interactions to flow seamlessly, millions of transactions must complete securely, correctly and on time every day.
Failure is now commonplace
When you look at the list of banks hit by outages in the past few years alone, the common theme is that they are all well-respected, long-established players within the sector, with vast customer bases of both consumers and businesses alike. Because of this, we expect them to be exceedingly robust and modern. Yet in 2015, the UK experienced more than 20 major banking outages. Failure is all too common, and the risk of failure is always present.
With the world’s banking systems becoming increasingly sophisticated and interconnected, the IT infrastructure of many of today’s financial institutions must be revamped to handle new demands. These demands often include enhanced integration across systems, as well as more comprehensive data management and systems monitoring needs. In many cases, FIs are already progressing along this path as they begin the journey to interconnected omnichannel banking systems, and likely have a foundation established (or at least planned) to meet the evolving needs of banking systems.
The challenges facing banking IT infrastructure extend beyond preventing individual outages or security incidents. Financial institutions must manage an expanding network of applications, payment systems, customer channels, databases, and third-party connections, all while ensuring transactions remain accurate, secure, and available.
Greater interconnectedness can create efficiencies and improve the customer experience, but it can also increase the potential impact of a technology failure. Problems in one system can quickly affect other applications and channels, making comprehensive monitoring and effective incident response increasingly important. Banks therefore need greater visibility across their technology environments to identify problems before they result in widespread disruption.
Modernization also requires financial institutions to address legacy systems that may not have been designed for today’s level of integration. Replacing every existing platform at once may not be practical, but banks can establish technology strategies that gradually improve interoperability, data management, security, and system resilience.
The transition toward omnichannel banking provides an opportunity to make these improvements part of a broader modernization strategy. By building stronger connections between systems while improving oversight of the underlying technology, financial institutions can create a more reliable foundation for future digital services.
As banking becomes more dependent on interconnected technology, resilient banking IT infrastructure will be essential to maintaining secure transactions, dependable services, and customer confidence.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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