In the age of invisible financial transactions, and especially post 9/11, systems resilience has been vital. But bank CEOs should not trust in belief alone; they should test out a systems shutdown and make sure they have the right CIO. By Chris Skinner.
On a recent visit to the London Stock Exchange (LSE), an American visitor enquired: “Where is your trading floor?” The receptionist smiled and said: “We haven’t had one of those for over 10 years, sir.”
The age of invisible finance has arrived in which everything is traded electronically. But what would the world be like without computers?
Imagine that we no longer had computers and had to do everything through general ledgers. That world of a bygone age is no longer one that we could contemplate.
After all, 98% of FX trades are speculatively traded through electronic systems. SWIFT, MasterCard, Nasdaq and other key entities only exist because of technology. Offset accounts, tracker funds, derivatives, spread betting – you name it, all rely on the fact that we live in a digitised world.
One look at the old LSE trading floor shows how things have moved on. The original trading floor, where open outcry and over-the-counter trading were a spectacle to behold, is being demolished and replaced by a shopping mall. Technology killed the trading floor.
The easiest way to stop the world working would be to turn off all the computers that run the financial network. Wasn’t that a key intention behind Al Qaeda’s attacks on Wall Street: to turn off the financial powerhouses?
What would happen if someone launched a computer virus that invaded the banking network and turned global finance off?
No way, you say. But there have been enough examples of bank websites being invaded to believe that the holes in systems are big enough to get through. Even if a virus could not get into your system, it might invade a trusted counterparty’s and be transferred to yours – what would you do?
Systems resilience has been a long discussion since 9/11. Many now believe that our organisations would cope with anything thrown at them.
But check out what you believe. Go to your IT department, turn off your systems for a day and see how you cope. At best, you will see a smooth transition within seconds with no loss of data. It may be dull but it would be fun to watch the technology folks having a panic attack. At worst, your bank may cease trading because you cannot get the data back.
The point of this column is that if you are in the latter camp, you should find out now, not by turning off your systems but by turning away your CIO and hiring one who knows what he or she is doing.
Chris Skinner is an independent financial commentator (www.balatroltd.com)
