Banks told to spend £1bn on new IT to prepare for failure
How to ensure an orderly collapse of the banking system
Posted in Management, 8th January 2009 13:34 GMT
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The Financial Services Authority is consulting with UK High Street banks about the need to improve their IT systems so that consumers will get their money back more quickly if a bank should fail.
The FSA estimates that British banks would have to spend just under £1bn to upgrade systems so they could provide a comprehensive list of accounts within 48 hours as the first step to giving them their money back. Such payments are made via the Financial Services Compensation Scheme (FSCS).
But Peter Tyler, policy director for retail at the British Bankers Association, told the Register: "We agree with the broad thrust of the FSA proposals but not how they suggest we should get there. There is a problem which needs addressing here but the FSCS is not the best way to do it.
"The FSCS was not designed with the collapse of a large or medium-sized bank in mind. Rather than have a large bank send out millions of cheques to customers who must then open new accounts, people should have constant access to their accounts."
Tyler said Bradford & Bingley was an example of a better way to deal with such failures - the government effectively nationalised the bank and shifted its book of retail accounts to Santander so customers had continuous access to their money.
The FSA consultation suggested banks would need to upgrade IT systems and modify applications in four main areas - data cleansing, eligibility account flagging, creating a single customer view - bundling all a person's accounts into one place, and additional capacity in all systems should a fast payout be required. Such systems would take at least 18 months to put in place and would cost £891.3m over five years.
Tyler believes that a different approach would still require some bank spending on improved systems, but less than that proposed by the FSA.
The consultation is open until 6 April. The FSA release is here. ®
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COMMENTS
@ Fraser
I don't know about the other guy using Ubuntu, but like the BSDs (OpenBSD, for me).
bundling all a person's accounts into one place
I work in a bank as a developer, and there is no way that's ever going to happen. All the different types of accounts are held seperately for resiience, not just by chance.
if i update the mortgage system, and something goes wrong, would you want it to take out the whole bank, or just the mortgage system!
all of the accounts are kept seperate for exactly that reason, and it's all tied together through the customer data.
the other issue is a legal one, the sheer volume of data that needs to be kept for years means that migration isn't ever a small job.
@Gulfie
Now now, dont lie The fact that you just promoted a Norton product makes me doubt that you are in IT.
@Gordon Pryra
Yes, that's right, lots of the old code from years ago is still run, but it's on spanking new databases/hardware. Why re-write old code that is well written, it introduces risk, you update it for the specific requirement changes. Better still if your requirement has changed interface a separate piece of code to do the new job rather than potentially compromising the old code by modifying it. (This does result in labyrinthine complexity, which is a down side...)
All IBM mainframes use HASP for printing, HASP is Houston Automated Spooling Program, it's a tiny bit of code that was written for the Moon programme to do printing, it works, it's well coded and efficient, the guy who wrote it is probably dead, certainly well into retirement, it doesn't mean that it's not supportable. It is documented and commented, this is a requirement for most modern companies, especially financial service.
Banks are required to undertake periodic DR rehersals, this is specifically to week out SPOFs, non-migrateable data etc. Also, due to the constant upgrade programeme that most modern companies run data migration happens all the time.
@Dapprman and John Scott and Fraser
Yeah the Kit you see in the offices, most of the servers etc are new and spanky.
But the databases and the systems in use on them are the same ones that have been there for 15-20 years. Just upgraded and modified along the way.
Try any form of data migration and scratch the surface and find the rotten core of bolt on quick fixes, single points of failiure and the old fav of mine. Yeah the guy that knows that system is retiring in 3 weeks.
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