Featured Product

    FCA Reviews Technology Change Management in Financial Services Sector

    February 05, 2021

    FCA published the findings from a review that looked at how financial firms manage technology change, the impact of change failures, and the practices utilized in the industry to help reduce the impact of incidents resulting from change management. While there is no single approach, process, or control that improves change success rates, the analysis found that stronger governance, day-to-day risk management, increased automation, and more robust testing and planning can contribute to successful change activity and less disruption.

    Based on the review, FCA found that firms with higher change success rates had the following common characteristics:

    • Firms with well-established governance arrangements have a higher change success rate. There was a positive correlation between the longevity of governance arrangements and higher change success rates in the sampled firms. The data showed that robust governance can help reduce the number and impact of operational incidents resulting from change.
    • Relying on high levels of legacy technology is linked to more failed and emergency changes. FCA found that firms with a lower proportion of legacy infrastructure and applications had a higher change success rate. Firms with a lower proportion of legacy technology also had a lower proportion of changes being deployed as emergencies and had a higher chance of those emergency changes being successfully deployed.
    • Firms that allocated a higher proportion of their technology budget to change activities experienced fewer change related incidents. Firms that had the lowest proportion of changes resulting in an incident dedicated between 50% and 75% of their information technology budget to these change activities.
    • Frequent releases and agile delivery can help firms to reduce the likelihood and impact of change related incidents. FCA found that firms that deployed smaller, more frequent releases had higher change success rates than those with longer release cycles. Firms that made effective use of agile delivery methodologies were also less likely to experience a change incident.
    • Effective risk management is an important component of effective change management capabilities. Firms that experienced less incidents due to failed changes mitigated the risk of technology change by leveraging a wide range of technical and business knowledge to ensure that potential impacts were well understood. 

    In addition, FCA identified the following areas that could lead to increased operational disruption when carrying out change activity:

    • Most firms do not have complete visibility of third-party changes. According to firms’ incident reporting, in 2019, over 20% of incidents at third-parties were caused by change. Workshop attendees suggested that third-party contracts could be better utilized to provide greater clarity on how changes are communicated and on the potential impact to the information technology estate of a client firm.
    • Firms’ change management processes are heavily reliant on manual review and actions. Repeatability and consistency throughout the lifecycle of a change and its deployment could help reduce the burden of assurance activity and could also allow for a higher degree of confidence when implementing technology change.
    • Legacy technology impacts firms’ ability to implement new technologies and innovative approaches. Firms that classified a higher proportion of their technology estate as legacy had lower adoption rates for DevOps, micro-architecture, and public cloud, which could affect the ability of these to benefit from innovative approaches.

     

    Related Links

    Keywords: Europe, UK, Banking, Securities, Technology Risk, Governance, Fintech, Change Management, Operational Risk, Third-Party Arrangements, Cloud Computing, Outsourcing Arrangements, FCA

    Related Articles
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.

    May 12, 2022 WebPage Regulatory News
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    News

    EC Mandates ESAs to Propose Amendments to SFDR Technical Standards

    The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.

    May 11, 2022 WebPage Regulatory News
    News

    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),

    May 11, 2022 WebPage Regulatory News
    News

    SNB Updates NSFR Forms and FINMA Consults on Operational Risk Circular

    The Swiss National Bank (SNB) published Version 1.2 of the reporting forms (NSFR_G and NSFR_P) on the net stable funding ratio (NSFR) of banks, along with the associated documentation.

    May 10, 2022 WebPage Regulatory News
    News

    US Agency Publications Address Basel, Reporting, and CECL Developments

    The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances

    May 09, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8191