The government's Banking Standards report has failed to address the underlying problems with the complexity of legacy infrastructure in the financial sector, according to industry body Intellect.
In recent years banks have been beset by substantial problems with IT infrastructure, with numerous outages affecting customers. Regulator the Financial Conduct Authority has even launched an investigation into the failings of the the IT systems used by Natwest last year.
However, according to Intellect there is little mention in the report of the problems created by the complexity of legacy infrastructure, Instead the main focus in terms of IT systems is around suggestions made concerning the introduction of a common utility platform for transaction processing.
According to Intellect the government should instead be demanding more action to improve and simplify the underlying IT infrastructure used by banks. The trade body suggests steps such as encouraging a greater number of technology-literate individuals to take roles in decision making positions on boards of financial firms, ensuring clarity on demands from regulators, and encouraging banks to map their existing infrastructure and process to enable better management of risk and allow greater flexibility in improving systems.
Ben Wilson, Associate Director for Financial Services Programmes at Intellect, said that the report is a "missed opportunity" to bring the problems faced by finance sector IT to the fore.
"A light has been shone on the 90 percent of the technology iceberg that is underwater, and that the Commission has recognised technology is not only a challenge for the industry to surmount, but also part of the solution in doing so, is commendable," he said.
"But they have, nonetheless, missed an opportunity to really bury down into some of the problems they identify, and connect the dots.
"Many of these issues around conduct, competition and supervision have a common denominator - the technology infrastructures that facilitate all the operations of 'the bank'. You reduce the complexity of this, and you ultimately make life a lot easier for the banks and the regulators, and you improve the ability of the banks to serve the customers and the wider economy'."
Also commenting on the report, Hugh Cumberland, solution manager for payment and settlement services at Colt, which provides IT services to the financial sector, highlighted the difficulties financial sector firms face in upgrading infrastructure but said steps could be taken to simplify systems.
"When it comes to IT, the majority of banks will continue to keep business critical systems on premise for many years to come," he said.
"Banks have always maintained large IT resources in house and it is simply not cost effective, or practical, to completely rip and replace their existing infrastructure.
"This isn't to say that banks shouldn't re-evaluate certain elements of their IT, and look to put in place a more flexible, agile infrastructure where they can buy compute on demand.
"For example, with smaller non-business critical back office systems, banks can benefit from a cloud based model."
However, Craig Donaldson, Chief Executive Officer, Metro Bank, welcomed recommendations in the report to enable more openness to payment systems with the creation of a 'plug and play' platform. This would help open up the retail bank sector for new entrants which are at a disadvantage with having to use the IT systems of the large incumbents.
A statement from the bank read: "The current system of 'agency banking' means that not only are existing banks able to charge discretionary fees to new banks to process their transactions, but that new banks are dependent on the service levels and IT systems of existing banks for their transactions. Transactional services should be made independent, and run by an independent payments regulator."