Building Operational Resiliency in Payments

The importance of IT resiliency has surged to the forefront, driven by the rapid digitalisation sweeping the industry.

As financial systems become increasingly interconnected, the risk of operational disruptions looms larger. Regulators in the EU and UK are responding to these challenges by introducing new rules mandating a more proactive approach to operational resiliency. Financial institutions are now tasked with comprehensively understanding and managing operational risks, ensuring they can effectively weather disruptions while continuing to serve clients.

However, modernising payment architecture, while essential for meeting evolving customer demands, presents its own set of challenges. From navigating operational disruptions to negotiating Service Level Agreement (SLA) complexities with third-party providers, banks face a myriad of considerations.

Amidst this digital transformation, developing a robust payment strategy is paramount. Banks must meticulously assess their existing payment systems, understanding how any changes may impact resilience. Crafting a clear roadmap, albeit amidst challenges of cost and complexity, lays the foundation for risk analysis and mitigation.

Central to this effort is determining 'High Availability' requirements. While functional aspects are often well-documented, operational requirements merit equal attention. Understanding existing processes and inputs is crucial, as it informs the design of a highly available payments system. By categorising applications based on criticality, banks can prioritise resources and streamline processing, ensuring uninterrupted service.

Moreover, in the wake of the pandemic, resilience extends beyond technical parameters to encompass processes and people. Technical authorities play a pivotal role in ensuring the resiliency of payment applications aligns with broader organisational strategy. Identifying and communicating high-risk areas early in the design phase, alongside regular risk assessments, further fortifies operational resilience.

Service and incident management are also pivotal components. With payment environments comprising a complex ecosystem of systems and applications, capacity planning and SLAs with third-party vendors are essential for maintaining service quality. Incident management, particularly for high-availability applications, demands vigilant monitoring across multiple levels to swiftly address production issues and uphold service standards.

As financial institutions navigate the digital frontier, prioritising IT resiliency emerges as a strategic imperative. By proactively addressing operational challenges and embracing a holistic approach to risk management, banks can fortify their payments infrastructure, ensuring uninterrupted service delivery amidst evolving market dynamics.