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Financial Services Outages - Why Speed Can Kill

In what industry experts referred to as a mini flash crash, a software glitch hit the market debut of BATS (Better Alternative Trading System) Global Markets, leading the company to completely withdraw its initial public offering of shares - hardly the start to life as a publicly listed company that will fill investors with confidence.

The software bug that hit BATS is just one example of financial institutions experiencing embarrassing glitches and outages that negatively impact millions of customers and put a sizeable dent in brand confidence. Recent outages from HSBC and HBOS caused similar levels of disruption and left millions of customers without access to services for up to a full working day in some instances.

Many of our financial institutions are still licking their wounds from what has been a bruising few years in the financial sector and can ill afford more damage from embarrassing but essentially entirely avoidable bugs and outages. And the last thing the business needs is a CIO who has to spend his time dealing with operational issues when they should really be focused on delivering innovation that is going to drive the business forward.

Financial services companies, like all B2C businesses, are increasingly dependent on IT to support and enhance the customer experience.  Customer-facing, revenue-generating applications are on the rise and as a result, IT is becoming increasingly complex because of more dynamic applications, infrastructure and their inter-dependencies.  Around the globe, development and operations teams are being pushed to reduce the time, cost, complexity and risk associated with the continuous delivery of web or online platforms and environments.

Because customer-facing workflows increasingly cut across applications and infrastructure, any inter-dependency failure across the application and infrastructure chain can result in a serious problem for customers (take the recent HSBC problems for example). Regulatory compliance acts such as Basel III in Europe and Dodd Frank in the USA make this even more challenging – everything must be auditable and fully accountable.

The applications aren’t just coming thick and fast, but they must also operate in high transactional throughput and low latency environments. To survive in this environment it is critical to stay on top of these inter-dependencies and to abstract and manage them away from the customer experience.  Managing or navigating the customer process or workflow is fast becoming the new role of IT.  The days of facilitating server set-up and application processes are now in the past - IT must make the transition to Business Technology and become business and IT process centric.

This is where automation comes in.  An automated process is more reliable, better understood, easier to manage, easier to accelerate and easier to compress.  Automation is the six sigma that IT will need in order to become Business Technology. Without it IT departments will stay mired in the ever-growing execution of low-level operational tasks such as re-boot, backup, reconfigure and file transfer.

In these environments automation must be in place to respond to any instance that could either slow the system down or increase latency. More importantly, only through automation can problems be predicted and remediated before they become a major incident.  

Automation should be functional, intelligent and scalable, so that it can deliver on the most stringent requirements for getting mission critical applications into product as soon as possible, with the elimination of configuration and deployment errors and, once delivered, to assure these applications meet their required service level agreements for latency, scale, availability and reliability.

Recently, a leading global service provider of insurance, banking and asset management employed automation in order to deliver a unified platform; not only did this eliminate complex workarounds, but it also resulted in a 40% reduction in duplication. Customers demand a level of quality, which through the implementation of an automation platform, this financial institution was able to deliver.

Financial institutions need to determine these three critical points:

  1. Strategies to optimise the processes required to deliver business critical applications in every stage of the systems development life cycle (SDLC), from development through production in the financial services industry
  2. How clients, partners and internal users of these applications are driving the need for more features, faster transactional throughput, sub-millisecond access to transactional and financial information, and predictable SLAs for quality and reliability.
  3. How to effectively manage an environment where time-to-market is critical and failure is unacceptable.

The BATS IPO withdrawal shows how quickly a process issue can have a significant impact on a business, and proves the importance of having the correct systems in place to enable pre-empting and preventing damaging situations like this. The speed at which you can deliver application updates and predict system failures is a critical part of this. The market’s confidence in financial institutions is low enough, without being exacerbated by completely avoidable mistakes.


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Comments: (1)

A Finextra member
A Finextra member 22 June, 2012, 08:48Be the first to give this comment the thumbs up 0 likes

Your observations about a growing number of IT glitches are certainly correct. But it is not only speed that can kill - even more dangerous is the growing complexity of IT systems ...

Complexity kills, and making systems simpler and more robust will certainly increase their reliability. Automation will help here - and there are even self-healing systems around that automatically bypass defective components. Component failures go unnoticed by the users, applications continue to run and no data is lost.