Financial services regulators have put a flag in the sand this year with a huge fine on the Royal Bank of Scotland, directly related to an IT failure.
This comes at a time of massive change in the finance sector. These changes are the after effects of the financial crisis that began in 2008 and include reams of regulation and increased competition. As the industry recovers from the so-called credit crunch, banks are beginning to invest in IT again.
While the digitisation of banks in the front and back office is a welcome trend there are still question marks over the reliability of legacy systems and the process that link to them and support them.
Big banks face competition from new players in the sector that are armed with the latest technologies and don’t have a legacy holding them back.
Here are Computer Weekly's top 10 financial services IT stories of 2014.
The Financial Conduct Authority fined the Royal Bank of Scotland ₤42m for an IT outage that left customers unable to access their bank accounts, but said underinvestment was not the cause.
At the same time, the Prudential Regulation Authority fined RBS £14m, bringing the bank's total forfeit to £56m.
Internet giants will not try to replace banks but will disrupt the sector through other services that take consumers away from traditional banks, according to analyst firm Forrester.
While traditional banking services, such as accounts, loans and mortgages, are unlikely to be offered by the likes of Google or Facebook, some peripheral capabilities are suited to their expertise.
A banking T-Rex is dying and nimble competitors will pick at its carcass. Is it too late for the retail bank giants to overhaul IT and survive?
Large retail banks with outdated technology face extinction – unless they can replace IT legacies – as new players use the latest IT to disrupt the market.
Finance sector regulator the Financial Conduct Authority fined 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 But is a fine the best way to persuade banks to upgrade the outdated technology at the root of the problem – or just a box-ticking publicity exercise?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.
UK bank IT systems are long way from being robust, a senior Bank of England official said while giving evidence at the Northern Ireland Affairs Committee at Westminster.
Sam Woods, a director in the Bank of England's Prudential Regulation Authority, made the comments after being asked about the Royal Bank of Scotland IT crash in 2012, which also hit Ulster Bank.
Banks are investing time and money in IT startups, creating an industry segment focused on digitising financial services, but are they building an IT ecosystem or betting on the next Facebook?
Hardly a month seems to go by without a bank launching a programme to support IT startups, but what is the value of this strategy for frugal finance firms that normally spend money only if there is a return on investment and a clear business case?
There is huge change underway in the investment banking sector as it recovers from the banking meltdown that began in 2008, and IT is central to it. Investment banks like HSBC Global Banking and Markets are moving more to electronic platforms across their businesses, facing regular changes to industry regulation, while becoming digital from front to back.
And the provision and support of IT hardware and software is not the end of the story for the industry’s CIOs, with data king in the digital era.
Lloyds Banking Group is set to cut thousands of jobs as part of a digitisation strategy that will automate manual tasks.
Mortgage processing and new account processing are examples of the tasks that could be automated. A three-year plan has been announced.
Dutch bank ING announced plans to cut thousands of staff in its back offices, callcentres and IT department over the next three years as it reduces its number of IT systems through automation.
The bank said it is moving to simplified IT systems and automation at a cost of €200m for two years from 2015. It expects to save €270m per year from 2018. It is cutting 1,700 full-time employees and reducing the number of contractors it employs by 1,075.
A secret payment made to Royal Bank of Scotland (RBS) by software supplier CA Technologies has fuelled controversy over the investigation into the IT failure that hit RBS customers in June 2012 and highlighted a lack of transparency in an industry critical to the UK economy.
Following a ₤56m fine from regulators the Financial Conduct Authority and the Prudential Regulation Authority, as well as significant compensation paid to customers, it was revealed RBS received millions of pounds from the company that provided it with the CA-7 batch processing software that went wrong.