The UK’s Financial Conduct Authority (FCA) has carried out a review of how companies implement technology changes, with a focus on customer protection and failure prevention.
As financial services technology is regularly updated, company’s implementation changes often face challenges and sometimes fail, which can have significant consequences for both the firms facing difficulties as well as customers.
The FCA’s review has argued that ‘failed technology changes are one of the main causes for operational disruption within firms, accounting for a quarter of all high severity incidents.’ These incidents can subsequently cause harm to both customers and the market.
Firstly, the report found that ‘firms with strong governance and risk management strategies are more successful,’ also arguing that ‘pairing subject matter expertise with a clear understanding’ of these strategies is vital.
Additionally, the FCA has stated that financial operators must regularly update IT systems and work towards reducing disruption. The immediate impact of this is that companies and the wider industry become more resilient to challenges.
Finally, the report has also acknowledged the impact the COVID-19 pandemic has had on firms’ ability to effectively manage technology changes.
It is argued that ‘it is very important for firms to understand how technology change activity can affect the services they provide,’ especially as remote and flexible working practices have become increasingly commonplace as a result of the pandemic and social distancing measures.
Overall, the FCA aims to inform discussions regarding reducing disruption caused by technology changes, and argues that firms should acknowledge the reports findings when assessing these future changes, including ‘investing in technology to protect themselves, consumers and markets.’
The full report can be found here.