IT Change Management Strategies in Banks
Banks suffer from three constraints when making changes to their systems:
1.Their systems and databases are very heavily used weekdays and weeknights; (in the night, in addition to 24×7 channels such as internet banking and ATM’s they are usually doing massive amounts of batch processing such as interest calculations). Their systems are not as extensively used at weekends but still have to be available for 24×7 channels and Saturday banking services
2. Their systems are a mixture of systems from many generations of technology, all interconnected in complex and unpredictable ways.
3. December is a particularly busy period for them for multiple reasons (higher levels of trading; more customers borrowing; many companies financial year end; the bank’s own financial year end) and at the same time staffing levels are low, particularly over the Christmas break.
Given these factors banks have generally come up with a three pronged strategy for implementing IT changes:
a) Be cautious! The second constraint means that results of IT change are unpredictable. This means that changes require extensive testing prior to implementation and careful scheduling of changes so that not too many are being implemented at one time. There should also back-out plans for every change.
b) Change events are scheduled to take place at weekends when customer services can be temporarily stopped with minimal impact; hence the frequent messages seen on internet banking screens on a Saturday night saying the service is down for “essential maintenance”.
c) Most banks implement a “change freeze” for December and the first week or so in January.
November 2011 Context
Banks were (and are) under an enormous amount of pressure to make changes:
- There are regulatory pressures to make divestments (Lloyds, RBS)
- There are integration projects (Nationwide, Co-Op, Lloyds)
- There are restructuring projects such as RRP and ICB (all banks)
- There are other regulatory drivers such as RDR, FATCA (all banks)
- There are urgent business internally driven changes needed to cope with the economic crisis and eurozone problems (all banks)
Collectively these amount to a bow wave of “must do” IT changes; which were washing up against the rocks of the December 2011 change freeze.
Events in Early November 2011
Three out of the four biggest banks in the UK suffered unplanned outages of services during the first week of November 2011. See press references below.
- RBS and Natwest Online Banking Down After Maintenance
- Barclays Customers Unable to Log Into Online Bank Accounts
- HSBC Customers Card Website Problems
We don’t believe this is coincidence but rather the result of banks/projects trying to do implementations when they are not quite ready. The alternative of delaying the implementations for the projects might well be a delay beyond the Christmas change freeze (some two months later).
On a slightly frivolous note, the author will take cash out of the ATM’s and make any important payments during the week in November in future.
From the bank’s point of view, there is no sign the demand for change will diminish for years!! As a result banks probably need to revisit their change management strategies and in particular they probably need to invest in some;
- More and better testing environments
- Re-engineering of their systems base so as to reduce the interconnectedness of all their systems
These may seem luxuries in these financially constrained times and also a bit late but without them banks are likely to be suffering a lot more bad press.