Safer Technology Change in the Financial Services Industry

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Many thanks to Benita Kailey for their review feedback and contributions to this blog.

Safe change is critical in keeping the trust of customers, protecting a bank’s brand, and maintaining compliance with regulatory requirements.

The pace of change is never going to be this slow again. The pace of technology innovation, business model evolution, and customer demands is accelerating – leading to an unprecedented number of technology changes being implemented by firms across the financial services industry. In 2019, the average number of changes across firms in the sector was 35,000. However, in recent work with leading UK financial services industry firms, IBM has seen the number of technological changes  double in 2023.

This rapid increase in technology change has significant implications for financial services organisations, and it is crucial that they prioritise safe and reliable delivery to maintain the trust of their customers, protect their brand, and comply with regulatory requirements.

In today’s hyper-connected world, customers expect to be able to access financial services providers through various channels, including mobile apps, over the phone, in-branch, and third-party services. Service-impacting issues, such as failed changes, can have an immediate customer-facing impact, quickly going viral on social media. This has raised the bar for delivering change safely and reliably. Customers have been spoiled by the high standards set by other organisations, such as Google and Amazon, which have set the expectation for always-on availability.

Financial services providers are now expected to meet these same standards, and any failure to do so can result in lost trust and reputational damage. In fact, a recent study found that 1 in 3 customers would consider switching to a competitor if they experienced a service outage or disruption. Moreover, the COVID-19 pandemic has accelerated the shift towards digital banking, making it even more critical for financial services organisations to deliver reliable and secure online services.

With an increased number of customers relying on digital channels, the potential impact of a service disruption is greater than ever. In the UK, the Financial Conduct Authority (FCA) has conducted a study on implementing technology change across the industry, following a number of significant IT failures over a 10-year period. In 2019, nearly 1,000 material incidents were reported to the regulator, with 17% attributed to change activity. The FCA’s research identified key thematic issues leading to change failure, including lack of visibility of third-party changes, change management process that is heavily reliant on manual reviews, legacy technologies impacting the ability to implement new technologies, and major changes being twice as likely to result in an incident.

The Bank of England (BoE) has also emphasised the importance of operational resilience in maintaining financial stability. Financial firms and institutions must have robust plans in place to deliver essential services – regardless of the disruption cause – including man-made threats such as physical and cyber-attacks, IT system outages, and third-party supplier failure.

IBM has a proven track record of delivering safe change at pace, with examples including the development of a new mobile banking app for a leading UK bank with over 5 million customers, delivering a new digital banking platform for a large UK building society with over 16 million customers, and transforming the credit card customer experience for a leading financial services business with over 6 million customers.

Financial services organisations need to focus on three key aspects of change to ensure safe and reliable delivery: defining change, delivering change, and deploying change.

Defining change involves shaping change, planning transitions, considering the impact on customers and colleagues, shaping funding, architecture, design, and tracking measures.

Delivering change involves implementing change with the right technology skills, utilising third-party services, partnering with the right providers, monitoring and testing, and packaging and preparing for transition to live service.

Deploying change involves developing deployment plans, preparing for deployment, engaging impacted customers and colleagues, sequencing deployment, monitoring implementation, and having contingency plans in place.

Key enablers for delivering safer change include having the right talent, right culture, and the right ways of working; automation and tooling, the right plan and sequence, the right approach to development and testing, and the right technology choices. When planning new change, it is important to pay close attention to find the right human for the job, not the right “resources”. Curating the right mix of people, who represent a diverse mix of experience, skills and talents creates better products and outcomes.

To deliver safe change, financial services organisations need to adopt a structured approach to change management. This includes establishing clear governance and leadership, defining a comprehensive change management process, identifying and mitigating risks, complying with regulatory requirements, developing a robust testing and quality assurance plan, and implementing effective monitoring and incident response.

Technology plays a critical role in delivering safer change, particularly in automation, monitoring, and collaboration. Automation can help reduce the risk of human error and improve the speed and accuracy of change delivery. Monitoring can help identify potential issues before they become incidents, enabling proactive remediation and minimising the impact on customers. Collaboration can facilitate communication and coordination between teams, reducing the risk of misunderstandings and errors. By capturing, analysing and acting on improvements from each change it can build a culture of continuous improvement and growth making each change an opportunity to enhance safety, efficiency and resilience.

IBM’s technology solutions, such as IBM Cloud and IBM watsonx, can help financial services organisations deliver safer change by providing a robust and secure platform for change management.

IBM Consulting has a strong track record of delivering safe change across the financial services industry. With our IBM Consulting Advantage platform, we can help clients deliver change safely, at pace, and with more consistency, reliability, and speed. Our platform delivers a wide range of capabilities that augment our uniquely human skills with AI, allowing us to build and deliver solutions safely, faster, and at scale, despite growing technology complexity.

By partnering with IBM Consulting, financial services organisations can leverage our expertise and technology to deliver safer change and maintain the trust of their customers, protect their brand, and comply with regulatory requirements.

In conclusion, delivering safe change is critical in the financial services industry, where the stakes are high, and the consequences of failure can be severe. In reality, it is not a battle between fast versus slow, yet it’s a challenge to be great rather than good. By adopting a structured approach to change management, leveraging technology, and partnering with experts like IBM Consulting, financial services organisations can reduce the risk of service disruptions and ensure that changes are delivered safely and reliably.

Find out more about our IBM Consulting Advantage platform today –  https://www.ibm.com/consulting/advantage