UK Bank boards need to over­see info tech­nol­ogy

The Pak Banker - - COMPANIES/BOSS -

Bri­tish banks Bar­clays Plc, HSBC Hold­ings Plc and Royal Bank of Scot­land Group Plc need more in­for­ma­tion-tech­nol­ogy ex­perts on their boards af­ter a se­ries of com­puter-sys­tem fail­ures in the past year left cus­tomers cut off from their ac­counts, ac­cord­ing to Trea­sury Com­mit­tee Chair­man An­drew Tyrie.

Banks need to spend more on mod­ern­iz­ing com­puter sys­tems and boards should take di­rect re­spon­si­bil­ity for tech­nol­ogy over­sight, rather than re­ly­ing on con­sul­tants, Con­ser­va­tive Party law­maker Tyrie said af­ter in­ves­ti­gat­ing the break­downs. The Bank of Eng­land should set up a group to mon­i­tor banks and re­port on IT is­sues to govern­ment, he said.

"Th­ese risks and prob­lems are caus­ing a con­sid­er­able amount of dis­tress and dis­rup­tion to mil­lions of peo­ple and thou­sands of busi­nesses," Tyrie said in a let­ter to the act­ing head of the U.K.'s Fi­nan­cial Con­duct Au­thor­ity, Tracey McDer­mott. "IT risks need to be ac­corded the same sta­tus as credit, fi­nan­cial and con­duct" mean­ing "more, and higher qual­ity, in­vest­ment is prob­a­bly re­quired."

Bri­tish banks have strug­gled with a string of com­puter fail­ures in re­cent years -- some at­trib­uted to ob­so­lete soft­ware and oth­ers to ma­li­cious ac­tiv­ity by hack­ers. HSBC's per­sonal and busi­ness cus­tomers were un­able to ac­cess their on­line or mo­bile bank­ing ser­vices for three days ear­lier this month, fol­low­ing a com­puter glitch in Au­gust that left 275,000 busi­ness pay­ments de­layed. A pay­ments out­age at RBS in June af­fected 600,000 credit and di­rect-debit trans­ac­tions, only seven months af­ter the FCA fined the bank 56 mil­lion pounds ($80 mil­lion) for a com­puter fail­ure that left mil­lions of cus­tomers with­out ac­cess to their ac­counts for weeks.

"Ma­jor banks will be at risk un­til they have man­aged to sim­plify their sys­tems to a de­gree that makes them eas­ier to man­age," Tyrie said in the let­ter, pub­lished along­side cor­re­spon­dence from bank ex­ec­u­tives in­clud­ing Bar­clays Chair­man John McFarlane, HSBC's U.K. and Europe CEO An­to­nio Si­moes and RBS Chief Ex­ec­u­tive Of­fi­cer Ross McEwan.

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