Compliance and security threats increase burden on bank IT staff

Banking headlines in 2005 were taken up by the online security threat posed by phishing and pharming attacks, but many of the biggest IT challenges lay in the back office.

Banking headlines in 2005 were taken up by the online security threat posed by phishing and pharming attacks, but many of the biggest IT challenges lay in the back office.

Regulatory compliance was high on the agenda, with Basel 2's capital allocation requirements continuing to generate huge IT costs - estimated by Accenture at more than £2bn in the UK alone.

Another regulatory challenge for UK banks that fell on the IT department this year was the detection of money laundering and other fraudulent activities. The 2003 money laundering regulations brought in by the Financial Services Authority required banks to install anti-money-laundering systems that could provide reports on suspicious activities.

More fundamentally, however, many UK banks spent the year grappling with renewal programmes for their legacy banking systems. According to Accenture, one issue that continued to hold banks back this year lay in the complexity and lack of flexibility in many existing systems, which made the task of replacing them all the harder.

Forrester Research said high street banks were finding themselves hamstrung by the patchwork development and extension of their core banking systems over the past 20 years. It said that although most banks had identified a clear need to renew their existing infrastructure, the challenge of planning the renewal of every application in every workplace across multiple sites was proving difficult.

Investment banks, where many legacy systems have long since been replaced, faced different IT challenges. Many of these were driven by the competing demands of the regulatory environment and the need for ever-more computing power to stay competitive in a market where processing speed is crucial.

 

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