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

    EBA Publishes Standards on Disclosure of Investment Policy Under IFR

    The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).

    October 19, 2021 WebPage Regulatory News
    News

    EBA Updates Filing Rules for Supervisory Reporting

    The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    APRA Finalizes Guidance for New Prudential Standard on Remuneration

    The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.

    October 18, 2021 WebPage Regulatory News
    News

    OCC Updated LIBOR Self-Assessment Tool for Banks

    The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).

    October 18, 2021 WebPage Regulatory News
    News

    TCFD Updates Guidance for Financial Disclosures on Climate Risk

    The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

    October 14, 2021 WebPage Regulatory News
    News

    BCBS Report Examines Progress on Adoption of Basel III Framework

    The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.

    October 14, 2021 WebPage Regulatory News
    News

    ACPR Implements Updates Related to DPM Version 3.1

    The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.

    October 14, 2021 WebPage Regulatory News
    News

    EBA Note Examines Transition Risks of Benchmark Rates

    The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.

    October 14, 2021 WebPage Regulatory News
    News

    OSFI to Communicate Next Steps on Climate Risk Policy in Early 2022

    In a letter to the federally regulated financial institutions and pension plans, the Office of the Superintendent of Financial Institutions (OSFI) published a summary of the feedback received to the January 2021 discussion paper on ways to address climate risks.

    October 12, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7568