We live in an always-on world where transactions are made around the clock. When it comes to online and mobile banking, consumers expect their information to be available where and when they need it. Financial institutions must strike a balance between providing consistent and innovative services while maintaining highly secure systems.
According to a Celent 2013 report on IT spending, the business of maintaining existing systems to simply “keep the lights on” consumes 77 percent of the information technology (IT) budget. This doesn’t leave much room for IT staff to be proactive, and when downtime occurs, the immediate negative impact is significant.
Downtime costs include loss of business, potential maintenance fees, and additional costs incurred even after service has been restored. This doesn’t factor in the measurable cost to brand and customer loyalty, including lost revenue, reputation damage and lost employee productivity.
A growing number of banks and credit unions have been plagued by service outages. According to Keynote Systems, Inc., a California company that tracks service disruptions, more than 70 percent of banking outages are caused by computer changes, traffic overloads, upgrades gone awry, and other technical issues.
How Do You Measure the Impact of Outage?
A study conducted by CA Technologies of 200 North American companies provides a broad indication of the impact of IT downtime on community banks and credit unions. The company found that financial institutions are hit harder than other businesses by outages—and that smaller companies lose a higher percentage of their revenue during downtime and recovery than larger enterprises.
As banks and credit unions encourage customers to rely on online and mobile banking to meet their financial needs, these outages become much more than just a big inconvenience for customers. To more accurately understand the total impact of the loss, consider what your brand is worth. The long-term effect of a damaged reputation can have a significant impact on revenue and profitability.
How Can You Address the Issue?
How should financial institutions assess and address the threats around the potential costs that downtime and outages pose to the business?
Many credit unions and banks have turned to third-party vendors to host their self-service banking solutions such as mobile or online banking. The attractions of this arrangement are many: they include lower cost of ownership, access to full-featured online/mobile solutions, and the ability to redirect resources to growing the business.
The risk is that these financial institutions are placing their hard-earned consumer relationships at the mercy of their vendor’s expertise and facility infrastructure.
Choosing a Data Center You Can Trust
When financial institutions are dissatisfied with their own solution or the performance of their third-party vendors, the first order of business is to identify a vendor with a data center that comes closest to being technologically impregnable. There are three main criteria that should be used to evaluate and understand the data center’s ability to protect the consumer relationship.
- Security and compliance
- Service response time/continuity
What questions should a bank or credit union be asking to ensure these criteria are met?
- What physical characteristics of the data center could impact uptime?
- Does the system have the reserve capacity to accommodate sudden surges in demand?
- Does the data center have a single point of control?
- Does the vendor use a stringent software management and change control process (a process to manage and document all changes for quality control purposes)?
- What monitoring and planning tools are in place?
Security and Compliance
- Is the data center compliant with the latest industry standards and requirements?
- What security measures does the vendor use to protect hosted data?
- Does the vendor use third parties for additional security monitoring?
- What architectural features protect customer data and minimize downtime?
- What business continuity and disaster recovery plans are in place?
The Balancing Act
Customers want financial institutions to be trustworthy, secure and reliable while consumers expect a certain level of service with few disruptions. In order to innovate and compete effectively, financial institutions must be able to offer a highly secure, reliable, online banking solution with redundant capabilities that ensures a consistent and positive user experience.
In the final analysis, an attractive interface, a broad feature set, and even ease of integration with core processors are meaningless without the reliability of a robust, secure, redundant data center.