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Natwest outages – will the bank face fines for IT failures?

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Following my recent blog on the issue of outsourcing support centres following NatWest IT failures, I would like to update you on the latest development in the RBS saga. In the wake of a succession of technical failures, blamed on faulty software updates and mainframe blowouts, the Financial Conduct Authority (FCA) has announced that it will conduct an investigation into the IT issues which affected customers of the RBS group (including NatWest and Ulster Bank) in June and July 2012.

The errors, which have already cost RBS £175m in costs and compensation, are high on the agenda for the new regulatory body, with Martin Wheatley (Chief Executive at the FCA) commenting that he suspected underinvestment in IT to be responsible for the numerous disruptions to service. RBS’ balance sheet is a staggering £1.4tn, making its reported reliance on legacy IT services troublesome. With Cloud solutions requiring very little upfront investment, I find it difficult to understand why one of the largest organisations in the UK would not be making the move to an enterprise-grade hosted solution, where a managed services provider would make continuous behind-the-scenes investments to ensure that the infrastructure was truly next-generation, and resilient enough to meet the business’ needs. Assuming the rumours of legacy equipment are true, such a move would significantly decrease the chances of disruption, improving customer opinion and enhancing their business continuity plan.

Though the outcome of the FCA investigation is yet to be decided, it is important that organisations in a similar position – relying on legacy IT for core business operations, within which a failure could bring down whole services – take note. Cloud solutions are a cost-effective IT solution, and with the resilience they afford, it would be unwise to wait for a brand-damaging incident as the push towards improvement.

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