Context
The FCA has released its findings from its multi-firm review which can be found here: https://www.fca.org.uk/publications/multi-firm-reviews/implementing-technology-change
The review looked at how firms implement technology change, the challenges caused when changes fail, and steps firms can take to protect consumers from harm and disruption in the market.
Key points to note
- The report intends to support discussions on how to reduce the frequency and severity of disruption due to technology change activity.
- Highlights include:
- Financial services technology is constantly updated, but where firms implement changes these don’t always go to plan.
- The coronavirus pandemic has required firms to implement change quickly and to move to new ways of working. Although many changes are successful, the review reveals that failed technology changes are one of the main causes for operational disruption within firms, accounting for a quarter of all high severity incidents that cause harm to consumers and the market.
- The review found that changes made by firms with strong governance and risk management strategies are more successful, that robust testing is an important part of the change process, and while testing automation has benefits it also presents challenges.
- It revealed that pairing subject matter expertise with a clear understanding of a firm’s strategy is vital.
- The FCA acknowledges that firms must regularly upgrade their IT systems and whilst the regulator does not expect changes to be implemented without incident, it does expect that firms should work towards reducing the disruption caused, making themselves and the wider industry more resilient.
- While the coronavirus pandemic has caused some delay to planned technology changes and system updates, it is very important for firms to understand how technology change activity can affect the services they provide, and invest in their resilience to protect themselves, consumers and the markets. This is especially important as firms increasingly use remote and flexible working.
Next actions
Firms should consider the findings when assessing their future technology changes. This includes investing in technology to protect themselves, consumers and the markets.