Banking Failures: Why These Are Happening, and How They Will Carry on Without the Necessary Investment in Testing and Infrastructure

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.

Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group

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