IT Governance Failures Cost Banks Millions

This mornings Times reports that RBS is planning root and branch reforms after IT woes, after paying out £175 million in compensation costs for computer glitches last June, and facing pressure and possible fines from the FSA, the regulator, to update aging bank systems. I’m not sure whether yet another computer glitch this year (hardware failure, which affected RBS, NatWest and Ulster Bank) finally swung the balance for the bank’s board, but I am sure that the lack of a basic, functioning IT governance framework is continuing to cost the bank and its shareholders (mostly us, the British taxpaying public) very substantially more than it would cost to put such a framework in place in the first place.

Creating an IT governance framework is neither complicated nor expensive. All it requires is will and commitment from the bank’s board, plus a modicum of organisation and planning. Frankly, spending £500 on something like the IT Governance Framework Toolkit would probably be a perfectly adequate initial investment to help this bank’s board make a start on meeting its basic fiduciary and regulatory obligation to manage risk including, as Turnbull wrote, risks to information and communications processes.

I wish it wasn’t odd that banks appear to find more time to manage paying senior bankers large amounts of money for poor performance than they do for actually improving the bank’s performance…..