Tech not a concern for banks more worried by political meddling
01 February 2010 | 5350 views | 0
Technology-related concerns are becoming less important for bankers who are far more worried about risks posed by political interference in the wake of the global recession, according to a survey from the Centre for the Study of Financial Innovation (CSFI).
In 'Banking Banana Skins', a poll of 450 senior figures from the financial world in 49 countries conducted by the think tank and PwC, political meddling came top of the top 30 risks facing the global banking industry.
This is the first time that interference from politicians has made the top 30 in the biannual poll, which has been running since 1996. Credit risk is cited as the second biggest concern, with too much regulation at number three, compared to eight in 2008. Surprisingly, given government-backed moves to encourage new entrants, competition from new players in the market ranks at a lowly 30.
John Hitchins, UK banking leader, PwC, says: "With political interference as the top risk and too much regulation at number three, the concern is that the financial crisis has taken the banking industry's future out of its own hands. The dash by governments to rescue their banks from disaster may have staved off a collapse of the system, but it has left attitudes to the banking industry deeply politicised."
Meanwhile, the poll indicates that IT is becoming less of a worry for bankers, with a high dependence on technology ranking eighteenth on the risk list, down from fifteenth in 2008 and sixth in 2006.
The CSFI says dependence on technology is no longer a critical issue because problems are better understood and the pace of change has slowed in recent years, although the management of online systems is a big problem, as is data security.
Other tech-related risks also rank fairly low on the list, with business continuity at 21, up from 23 in 2008, back office at 24, down from 19 two years ago and payment systems at 26, down from 27.
However, the report cites economist Roger Kubarych, who warns that firms and regulators take for granted that information technology is well run. "What if it isn't? It has been starved of resources in many financial institutions for short-sighted, near-term budgetary concerns," he says.