Achieving operational resilience

May 2019

“The conversation has really changed in the past year. The board
needs to truly understand critical business services both for the
bank and the market.”
— Participant

Customers’ increasingly demanding preferences and the evolving competitive landscape are putting pressure on banks to be innovative and agile. Despite the capital and energy recently invested in technology, many major banks remain in the early stages of becoming truly digital organizations. To date, investment dollars have focused primarily on enhancing customer service and efficiency, but these improvements have often been layered over or supported by decades-old ‘legacy’ systems that often obstruct the banks’ achieving the full potential of end-to-end digitalization.

Becoming a fully digital financial institution creates new challenges to operational resilience from the significance of relationships with third-party platform providers, the further digitization of financial services, and ongoing threats to cybersecurity. Information technology (IT) outages and systemmigration failures have captured the attention of frustrated customers, the media, politicians, and regulators. As banks maintain, maintain and replace their systems architecture, it will be critically important to embed operational resilience into planning and implementation.

On February 27 (London) and March 7 (New York), 2019, BGLN participants met to discuss the ways incumbent banks are approaching operational resilience: How should management teams, boards and regulators think about topic as broad as operational resilience? What role should impact tolerances play in the future? How should banks test for operational resilience?

This ViewPoints synthesizes the key themes which emerged from the discussions in each of these meetings, and from conversations with network participants beforehand and immediately afterwards. These meetings also included discussions on upgrading legacy banking platforms. Themes from those parts of the discussions are summarized in a separate ViewPoints.