Christian Fegler, PA financial services expert, has had a byline article published on how financial services firms must strike a balance between innovation and risk when embracing new technology.
Christian explains that the sector’s eagerness to improve and create new solutions can lead to unsecure systems. Recently, several Swedish banks havefacedmajor problems with their online banking.One example is the ICA bank that in mid-August accidentally doubled the amount on all card transactions. A similar incident recently affected Swedbank customers.
According to Christian, “It is imperative that the financial market participants take responsibility for IT while increasing the CIO's participation as a strategic advisor. Especially in activities related to payment transactions and trading over the internet.”
Continuing, the article explains that banks and financial institutions worldwide are often exposed to the potentially serious consequences of poorly functioning IT systems. Experience shows that many people use new technology without having tested the functionality sufficiently, which is very dangerous in an industry that turns over huge sums of money every second.
“Recently, the international financial market, in the space of ten days, experienced four very serious incidents that may directly or indirectly relate to insufficient testing,” says Christian. “In all cases, IT system failures were the cause of the problems,” he continues.
According to Christian, financial services firms should take the following steps to protect against IT failures:
Test IT systems thoroughly
Employ people with the right skills to test various scenarios, including those that are seen as less likely, to eliminate confounding factors and threats.
Seek advice from experts
Take advantage of your IT experts to understand the risks and potential challenges.
Work actively to continuously reduce risks
The chain is never stronger than its weakest link. Do not forget to carry out continuous monitoring, stress testing, and similar activities to minimize the threat and impact of bugs in systems and processes.
In the article, Christian says that adopting new technology has been a positive step for the financial services sector, as it has simplified and streamlined the way customers use financial services. However, as we have become increasingly dependent on these solutions in our everyday lives, banks need to be vigilant about mitigating risk and increasing reliability.
Christian Fegler is a financial services expert at PA Consulting Group
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