Europe’s new banking watchdog, The Single Resolution Board (SRB), said banks need to revamp their technology so that in case of any trouble, they can be split up easily without affecting customers.
The watchdog was formed by Regulation (EU) No 806/2014 on the Single Resolution Mechanism earlier this year to handle struggling financial institutions after the European Central Bank took over supervision of 120 top banks in Europe.
This was to ensure that in case any bank subject to the Single Supervisory Mechanism is in financial trouble, its resolution is managed efficiently with minimal costs to taxpayers and the economy.
With increasing scrutiny on risks, systems and compliance, banks will spend an estimated $200bn on technology this year according to research and advisory firm Celent.
Elke Koenig, SRBs chairwoman who is responsible for ensuring that the 30 banks she is handling are equipped to deal with market shocks or their collapse said that the key priority for the banks was to overhaul their IT systems, reported Reuters.
Koenig said at the Reuters’ Financial Regulation Summit in London: "We are not sitting here for customers and then orchestrating nice funerals. We are sitting here to make sure we have adequate planning and can protect the taxpayer."
"Banks have to do their homework on the IT front. There is a lot of nitty gritty housekeeping that needs to be done by banks that takes a bit of time but clearly we will mandate it.
Image: Banks need to overhaul their technology to be equipped to face collapse. Photo: courtesy of Staurt Miles/freedigitalphotos.net.