APRA warns on neglecting technology back-end
Australian financial services firms have been warned not to neglect maintenance of their existing technology platforms as they seek to embrace new technologies.
Australian Prudential Regulation Authority (APRA) chairman, Wayne Byers has told a Sydney forum that while the regulator welcomes new investment in new technology because of the benefits it can deliver to consumers, this should not be at the expense of existing systems.
He said there was a need to continue investment in existing technology platforms while at the same time putting money into new technology which may well replace it.
"The Australian financial sector is, on the whole, pretty quick to adapt new technology as it emerges. And we have some important new infrastructure currently being built, like the New Payments Platform that will facilitate payments 24/7," Byers said.
"But we also face the challenge that, like many parts of the world, large parts of financial firms' core operating platforms are still based on technology that is increasingly dated, and not as integrated as it needs to be."
He said that particularly with the rise of fintech and potential disruptors, the temptation in the current environment was to devote a larger proportion of any investment budget to shiny new toys at the front end that excite the customer, and perhaps defer a bit of maintenance on the back office functions that make sure the customers' transactions actually get processed and recorded correctly.
"As a supervisor, we are very keen to see investment in new technology by financial firms, because we think it offers considerable benefit to the soundness, efficiency and competitiveness of the financial system," Byers said.
"The important thing for us is to make sure investment budgets are expanding to accommodate that, and it is not simply funded by a diversion of resources from other essential tasks."
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