Intellect, the trade association for the UK technology sector, has called on the UK’s financial regulators to force banks to tackle the substandard infrastructure that underpins the majority of the financial system, or risk future financial crises, controversies and systems failures.
It says that financial infrastructure is the complex web of technology systems and networks that underpin every function in a bank, from processing transactions to assessing loan applications. It is the ‘plumbing’ that allows data, the lifeblood of the financial system, to flow to where it is needed in order for decisions to be made.
Intellect has outlined how this substandard infrastructure, the result of years of lack of investment by banks, does not allow them to know their own businesses well enough. Unless this is tackled the new regulators will not have an accurate view of the whole of the financial system, preventing them from spotting abuses or another financial crisis before it is too late.
Intellect has called for the UK’s regulatory authorities to step in and mandate change by requiring banks to ensure that their critical infrastructure is fit for purpose, not as ‘yet another thing to be implemented’, but as the foundation upon which all other reform can be more effective and banks can look to regain the public’s trust.
Ben Wilson, head of financial services programmes at Intellect, said: “This infrastructure is the foundation upon which the entire financial system is built and it has been neglected for far too long.
For the past four years, government and regulators have been trying to treat the wounds exposed by the financial crisis with sticking plasters.
“The regulators, and in particular the Financial Policy Committee and the forthcoming Prudential Regulatory Authority, must take the lead on this now, as it’s not going to sort itself out. They either address this elephant in the room, or the effectiveness of the wider reforms that so much time and resource has been ploughed into over the last four years will be severely limited.”
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