Implementing technical change will always incur risks. But, by putting the right measures in place will ensure that these are kept to a minimum.
In their latest report, the Financial Conduct Authority looked into why change related incidents are consistently one of the top causes of failure and operational disruption and highlighted
the key ingredients needed to ensure successful change.
So what are the best practices financial institutions need to adopt in order to reduce the impact of technology change? Read on.
A recent Cross-Financial Service change management review by the FCA looked at how financial firms manage technology change, the impact of change failures and the practices utilised within the industry to help reduce the impact of incidents resulting from
change management. Key amongst other things, the report revealed that in general, change was managed effectively by the industry with only 1.6% of technology changes resulting in an incident.
However, due to the volume of change implemented by sample firms, this resulted in significant disruption amounting to 13,767 incidents in 2019 of which 14% (1,900 incidents) had a customer-facing impact. It’s difficult to put a price on such incidents.
If we equate them to an IT outage, then according to a Gartner report, a single hour of downtime is likely to cost over $100,000.
So what does best practice look like?
According to FCA’s study - “stronger governance, day-to-day risk management, increased automation and more robust testing and planning can contribute to successful change activity and less disruption".
Overall, the FCA found that organisations that used microservices, automation and deployed changes more frequently had higher change success rates.
Eight common characteristics of successful change according to the FCA:
1. Good Governance (2+ years)
2. Limited reliance on legacy technology
3. A dedicated, meaningful proportion of their technology budget for change
4. Frequent releases
5. Agile development methodology
6. Microservices Architecture
7. Automation in Environment Provisioning
8. Effective risk management
Partnering with a specialist provider who can tick all the eight boxes is a great starting point although micro-services architecture, automation and more frequent deployment are no guarantee alone for reducing incidents arising from change. To get the full
benefits, FI's need to culturally and operationally be set up for this, end to end. That means having genuinely agile teams, empowered to effect change. This means working in a genuinely collaborative way, across organisations and departments to ensure that
they are empowered to effect incremental change and manage the associated risks.
Read more on the findings from FCA report here: