The turbulent time for the banking sector continued this week with the news that Bradford & Bingley has issued a massive profits warning. Worryingly, reports suggested that the bank’s directors did not have up-to-date information about the state of the company; it has been suggested that this was, in part, due to ‘hopelessly antiquated information technology’ within the bank, which led to outdated financial information presenting an inaccurate picture on which crucial decisions were made. Bradford & Bingley now finds itself in an IT position not dissimilar to that of Northern Rock; the bank’s sub-standard technology systems were a noted factor in the downfall of the institution.

The relationship between financial institutions and technology has, like a share price, always been up and down. Technology can provide valuable services to financial institutions, which are needed now more than ever. These services are very much in demand; recent research from a recruitment firm found that demand for IT professionals from city firms remains strong, despite the impact of the credit crunch and concerns over market volatility.

The skills of IT professionals will be needed as the government continues to look at ways to reform the banking sector, restore consumer confidence in the system and in doing so, try to avoid another Northern Rock. The Banking Reform Bill, announced as part of the government’s pre-legislative programme, is part of the means to achieve this. One of the aims of the Bill is to improve the Financial Services Compensation Scheme’s ability to pay out to customers more quickly in the event that a bank becomes insolvent. This legislation, and issues like information sharing and data security, will be causing headaches amongst the CIOs in the city as they seek to ensure their information systems are up to the task. As the fall out from Northern Rock and now Bradford & Bingley has demonstrated, 21st century technology should be at the heart of financial institutions, enabling them to overcome the challenges of the future.

By Ben Andersen-Tuffnell, Programme Manager