All too often we embark on big projects and grand journeys that set out to make everyone’s lives easier. If resources and money are no object, then all possibilities can be realised, but limitless patience and resources are not practical for every organisation. I’m minded to focus on banks who strive to provide excellent customer service whilst satisfying themselves and the regulators that their internal systems and controls are fit for purpose.
We’ve seen the results of ambitious IT programmes which disrupt consumers access to banks, which is a key focus of regulators. Regulators are looking for prudent approaches to technology and systems as well as prudent approaches to managing a bank's balance sheet. Often the expense of programmes to replace core banking platforms, for example, is hugely underestimated, and the resulting cost becomes an uncomfortable conversation at board level and with regulators who worry about the impact to the bank's capital levels. Of course, these project estimations can be addressed as part of ICAAP submissions which would rationalise cost versus benefit.
Is it really possible to impede a bank financially with poorly run projects?
Yes, it is and whilst cost overruns can impact capital expenditure and whilst they may be written off over 3 to 5 years, the longer-term impact is on a bank's capital base and costs of missed opportunities from a business and operational perspective. As banks are essentially highly geared entities, any impact on capital has a disproportionate effect on the balance sheet and missed opportunities are numerous when a bank is consumed by overrunning projects and activities. With complex, expensive programmes, most banks are exposed to impacting their business model should things not go well. The very large banks may well feel insulated by their economies of scale, which is fair but often leads to other issues associated with governance and getting value for money.
This risk is well understood by banks and the regulators, which is why the regulators are keen to keep an eye on poorly run programmes, especially concerning mission-critical technology platforms which could also adversely impact customers. Regulators are keen to ensure that banks are run prudently and that the key functions are protected and well managed.
At Eurobase, we are acutely aware of the risks in upgrading, implementing and integrating Treasury & Trading technology. We understand that without good quality systems and controls, the regulators may well limit the activity of a bank (unbeknown to customers). However, it is also clear that in adopting a prudent approach to technology, banks will often stick with poor practices, EUCs (End User Computing, e.g., spreadsheets) and manual tasks for far longer than is acceptable.
We advocate a smart approach to implementing mission-critical Treasury and Trading platforms, recommending a phased approach to implementing our Siena software working with customers to correctly identify the real hotspots in terms of current risks, identifying the dependencies that exist around them and ultimately providing a low-risk approach to remove those risks and replace legacy solutions with suitable technology incrementally. Using a range of APIs and integration approaches allows us to help customers integrate into existing infrastructure whilst future proofing and ensuring all elements of the operating model are considered.
We recognise that customers wish to enhance, build and develop their infrastructure but should adopt a careful and cost-effective approach so as not to break anything along the way. Come and talk to us about how we can help you build your bank without breaking it.