Bank of England governor Mark Carney yesterday ordered a strategic review of how the central bank uses its resources.
Carney’s aim is to realign the institution to meet its role in managing monetary policy, financial stability and the supervision of banks, and he has repeatedly stressed his desire to modernise the way the BoE operates.
Meanwhile, the BoE’s chief operating officer, Charlotte Hogg, has launched a business-wide review to understand how it can minimise costs by ensuring that tasks and processes are streamlined.
But how can the BoE modernise and become more efficient without spending more? And once efficiency is achieved, what is the end goal?
Carney’s quest echoes that of The Banking Commission, which recently suggested in a report that banks must move on from ‘patchy and outdated in-house IT’. The report outlines that out-of-date technology is preventing banks’ ability to cut costs as resources,
time and funds are focused on ensuring ensure that technology fulfils its most basic tasks.
Parallels can clearly be drawn between The Banking Commission’s recommendations, and Carney’s crusade to rid the BoE of its legacy systems in order to free up resources. But what are they hoping to achieve?
According to Forbes, 80% of IT budgets are spent simply ‘keeping the lights
on’ – ensuring that simple processes and tasks are met to ensure the basic running of a company. Ultimately this leaves a very small fraction of the CIO, CTO and COO’s time to ensure that the company is driving forward towards its commercial goals. Put simply,
the banking sector is simply looking over its shoulder.
What needs to be done? And how can resources be freed up for innovation, while keeping costs and resources lower at the same time?
Implementing automation solutions would enable the BoE to streamline the very tasks that are holding it back – removing manual intervention and ensuring that simple tasks are handled automatically. It would enable a standardised audit trail, making sure
the right people have access to the right systems and guaranteeing that financial institutions adhere to industry standards, while reducing the need for cost involved in keeping legacy IT systems running.
Additionally, lowering the costs associated with personnel takes on a similar solution. By automating core business processes, compliance is ensured, business continuity becomes automatic, and the business is safeguarded against human error.
Before the financial crisis, the burden of legacy systems were much less of a concern for management – banks could afford the specialist staff required to extend the life cycle of their legacy systems and avoid any mishaps.
Yet, with budgets tightened, Carney’s crusade is symptomatic of where the banking industry should be heading – ensuring that processes are streamlined, IT is agile and that innovation can become a reality.
By bringing everything together and connecting what currently present loose ends, automation would enable the banking sector to deliver the much-needed cost-saving that it needs, while simultaneously freeing up resource to focus on delivering value.