The banking sector in the UK is facing an alarming surge in IT outages, disrupting essential financial services and eroding customer trust. A recent parliamentary report highlights that major banks have collectively experienced at least 158 significant IT failures over the past two years, causing over 800 hours of service downtime. Financial institutions have paid millions in customer compensation due to these failures, raising serious concerns about the stability of banking technology infrastructure.
These outages disrupt payments and account access and create financial distress, especially for customers living paycheck to paycheck. Given the rapid shift toward digital banking and increased regulatory scrutiny over operational resilience, banks must rethink their technology strategies.
This challenge is not confined to the UK; banks worldwide are increasingly prioritizing resilience to safeguard their credibility and reputation while ensuring compliance with regulatory requirements.
Let’s explore the key challenges behind banking IT failures and outline how modern technology interventions—including DevOps, Observability, Secure Coding, Legacy Modernization, and compliance with evolving regulatory frameworks—can strengthen banking IT resilience. Also, let’s see how Coforge’s expertise enables banks to overcome these challenges effectively.
Key Challenges Leading to IT Failures
Several factors contribute to IT failures in banks, including:
- Legacy Systems and Technical Debt: Many banks rely on decades-old mainframes and outdated software that struggle to support modern digital banking demands.
- Weak SDLC and DevOps Practices: Inefficient software development lifecycle (SDLC) processes and inadequate DevOps implementation lead to unstable releases, increasing the risk of production failures.
- Lack of Observability and Proactive Monitoring: Banks often lack real-time monitoring and predictive analytics, making detecting and mitigating issues before they escalate difficult.
- Security Vulnerabilities and Poorly Secured Code: Security Vulnerabilities and Poorly Secured Code: Cybersecurity risks and unsecured coding practices lead to system breaches and unexpected failures.
- Third-Party Dependencies Without Failover Strategies: Many banks rely on third-party service providers for payment processing, cloud hosting, and authentication services but lack robust failover mechanisms when these external systems experience downtime.
- Regulatory Compliance and Resilience Gaps: With increasing regulatory oversight, banks must ensure compliance with new operational resilience frameworks, such as the UK’s Operational Resilience Framework, the EU’s Digital Operational Resilience Act (DORA), and the Financial Conduct Authority (FCA) guidelines on ICT risk management.
Global Regulatory Frameworks Enhancing Operational Resilience
In response to the growing number of IT outages, regulators are implementing stringent rules for banks to improve their operational resilience and technology risk management. Key regulatory frameworks include:
1. UK Operational Resilience Framework
- Enforced by the Bank of England (BoE), Financial Conduct Authority (FCA), and Prudential Regulation Authority (PRA), requiring financial firms to:
- Identify and map critical business services.
- Implement robust testing and incident response mechanisms.
- Maintain resilience even in extreme scenarios.
2. EU Digital Operational Resilience Act (DORA)
- Applicable to UK-based firms operating in the EU. DORA mandates:
- Stronger ICT risk management policies.
- Third-party ICT provider regulations to reduce dependency risks.
- Mandatory penetration testing and incident reporting to regulatory authorities.
3. Financial Conduct Authority (FCA) ICT Risk Guidelines
- FCA emphasizes resilience through:
- Continuous monitoring of IT systems.
- Cloud and third-party risk management policies.
- Incident reporting within tight timelines to avoid regulatory penalties.
4. Dodd-Frank Wall Street Reform and Consumer Protection Act
This Act established the Financial Stability Oversight Council (FSOC) and the Office of Financial Research (OFR) to monitor systemic risks and promote financial stability. Additionally, the Federal Financial Institutions Examination Council (FFIEC) prescribes uniform principles and standards for the supervision of financial institutions, including guidelines on cybersecurity and operational risk management.
By aligning with these frameworks, banks can enhance operational resilience and avoid hefty fines associated with regulatory non-compliance.
Technology Interventions to Strengthen Resilience
Banks must adopt a holistic approach integrating modern IT resilience strategies to address these challenges. The key technology interventions include:
1. Modernizing Legacy Systems
- Cloud Migration and Containerization: Moving from monolithic, legacy architectures to cloud-based, containerized microservices improves scalability and resilience.
- API-Driven Integration: Decoupling legacy systems using APIs enables seamless integration with modern digital banking applications, reducing system dependencies.
- Event-Driven Architectures: Implementing event-driven processing minimizes the risk of system-wide failures by enabling asynchronous, decoupled transactions.
2. DevOps and Secure SDLC for Stable Software Releases
- Continuous Integration & Deployment (CI/CD): Automated CI/CD pipelines allow faster and more reliable software updates, reducing downtime risk.
- Infrastructure as Code (IaC): Automating infrastructure provisioning ensures consistent environments and minimizes human errors during deployment.
- Security in DevOps (DevSecOps): Embedding security checks early in the SDLC, such as automated vulnerability scanning and code analysis, prevent security flaws from reaching production.
3. Enhancing Observability and Monitoring
- Real-Time Observability: Implementing AI-driven observability tools enables continuous tracking of system performance and alerts on anomalies before they cause outages.
- Predictive Analytics: Leveraging AI and machine learning models can identify potential failures based on historical data, allowing proactive issue resolution.
- Automated Incident Response: Integrating intelligent automation into incident management processes accelerates response times and reduces downtime impact.
4. Security-First Coding Practices
- Zero-Trust Security Models: Implementing zero-trust principles ensures that no user or system component is inherently trusted, reducing risks from internal and external threats.
- Automated Threat Modelling and Code Scanning: Embedding security scanning into the SDLC helps detect vulnerabilities early, preventing exploit-related outages.
- End-to-end Encryption and Secure APIs: Ensuring all data transfers are encrypted and APIs are secured with strong authentication reduces risks of system breaches.
Coforge’s Expertise in IT Resilience
Coforge has helped many leading financial institutions adopt technology interventions to minimize IT failures successfully. Below are some engagements led by Coforge:
- Executing the Largest Mainframe Modernization Program in the Industry
A global travel technology provider embarked on one of the largest mainframe modernization projects in the industry in partnership with Coforge. The firm significantly improved performance and resilience by re-architecting legacy applications, moving workloads to the cloud, and adopting automated testing and DevOps, ensuring uninterrupted service for millions of customers.
- Implementing End-to-End Observability for Payments
A major global bank struggled with intermittent payment failures due to a lack of real-time transaction visibility. By implementing an end-to-end observability framework, the bank achieved real-time tracking of payment flows, automated anomaly detection, and proactive failure resolution, significantly reducing downtime incidents.
- Enhancing DevOps and Observability for a UK-Based Bank
A leading UK bank faced frequent service outages caused by unstable deployments and a lack of monitoring across critical banking services. Adopting DevOps best practices, automated CI/CD pipelines, and AI-driven observability resulted in a 40% reduction in failed releases and faster incident resolution.
- Mainframe Modernization and Resilience for Banking Operations
Two major banks—one in the UK and one in the US—undertook large-scale mainframe modernization initiatives to enhance system resilience. By migrating key services to modern platforms while ensuring a hybrid architecture for mission-critical workloads, both banks achieved a 25% increase in processing efficiency and reduced system downtimes.
Through its engagements, Coforge has helped financial institutions align with regulatory compliance mandates, such as DORA and FCA operational resilience guidelines, by ensuring robust ICT risk management, real-time observability, and failover strategies for critical banking operations.
Conclusion: The Path Forward
As banking IT failures become increasingly disruptive, UK banks must take a proactive approach to strengthening resilience. Investing in DevOps, observability, secure coding, regulatory compliance, and legacy modernization is no longer optional—it is essential to maintaining customer trust and meeting regulatory expectations.
With a strong foundation in financial technology modernization, Coforge is uniquely positioned to help banks navigate these challenges. By leveraging our expertise, banks can transition to a more resilient, secure, and scalable IT infrastructure, ensuring seamless banking services in an increasingly digital world.
The time to act is now—banks that prioritize IT resilience today will emerge as leaders in the future of digital banking.
Need help? Contact our banking experts to learn more about how technology can improve resilience and reliability in preventing bank outages.
