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Why the banking industry needs an IT makeover

UK banks face huge challenges keeping their service availability levels at 99.99%

The number of IT operational and security incidents was disclosed by UK banks for the first time this year, following an FCA request. The findings were a wake-up call for the industry and consumers alike.

Between April and December of last year, most major high street banks suffered more than 10 IT shutdowns. Additionally, last month, NatWest and RBS faced IT glitches to their app on one of the biggest shopping days of the year, Black Friday, leaving customers unable to access their accounts.

As customers increasingly make the switch to online banking, the negative impact of these shutdowns becomes more severe. Without access to vital banking services, customers are left frustrated.

Even after networks come back online, customers can still feel the side effects. A ClearScore report from this year found 64% of customers affected by outages were left with a worsened credit score. This clearly isn’t OK; banks must make the necessary changes to IT infrastructure to reduce the likelihood of an outage.

Due to the complex nature of financial institutions’ legacy IT systems, traditional banks have more IT outages than the challenger, digital-first banks. Why? Because their rigid systems have been in place for decades, with little to no innovation during this time.

Now, as the competition and customer demands are on the rise, and more banks want to be innovative and be “digital-first”, they need to make some serious changes if they want to stay in existence.

As banks transition to a digital approach, they open the door to new levels of complexity needing to be addressed. And as more customers start applying for various services via new channels, vast amounts of data needs to be transmitted, correlated and analysed – in real time.

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Today more than ever, IT pros need to truly understand behaviours and patterns across the network and assure a seamless experience for their most important critic, the user.

With the pressure on and the need to innovate, a hybrid cloud approach has become a popular choice for banks today to boost capacity to handle data and provide once-nonexistent agility, security and scalability in such a traditional environment.

The cloud enables financial institutions to achieve better efficiency and reductions in costs, which means more capital can be put towards areas such as security. But the environment is complex, and a deeper level of network monitoring is required. Only through a supplier-neutral, end-to-end pane will banks be able to properly monitor IT networks and identify issues leading to outages.

Any digital migration needs to be handled in the right way, too. A recent report delving into TSB’s IT meltdown highlighted management and IT suppliers who weren’t ready to implement and run the bank’s new banking platform.

In short, a lot is on the line for IT pros responsible for these types of projects. Compared to other industries, a massive spotlight is on the financial sector. Even a slight lag to the bank’s network can cause a domino effect to security, performance, and, eventually, the user. And we all know that if a customer has reason to believe their money isn’t safe, they’ll switch to another provider.

Tomorrow’s banks cannot be run by yesterday’s systems. Banks and their IT pros need to move with the times and future-proof their businesses with emerging technology, such as artificial intelligence and machine learning.

Buzzwords aside, these technologies umbrella automation, which drives best practice around operations and customer interactions. Without a more up-to-date approach in place, traditional banks will be left behind and eventually kicked out by the digital players.

Sascha Giese is head geek at software supplier SolarWinds.

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