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18 November 2014

IT stress testing can fix banks' legacy problems, say experts

Finance sector regulator the Financial Conduct Authority (FCA) is expected to fine the Royal Bank of Scotland (RBS) tens of millions of pounds following a major IT problem that locked customers out of their accounts for days. But is a fine the best way to persuade banks to upgrade the outdated technology at the root of the problem – or just a box-ticking publicity exercise? To an unhappy RBS customer, a multimillion-pound penalty might sound an appropriate punishment – but it could prove the opposite, if all it achieves is to create the illusion of progress while giving the bank a cheaper alternative to improving the IT systems at the heart of the issue. Regulators use Capital Adequacy Ratio tests to check banks have enough capital to absorb a certain level of loss. Banks' cyber security was put to the test last year, as Operation Waking Shark 2 tested thousands of staff at London’s major financial institutions with a simulated cyber attack on systems. But banks are built on large and complex IT systems and there are no such ...

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