Third benchmarking survey - are firms aligning with regulatory expectations?

Over the last several weeks we have been reviewing submissions from the third iteration of our operational resilience industry benchmarking survey.

Where the first and second iterations of the benchmark focused on firms’ progress in implementing regulatory requirements, the current survey reflected the post-implementation change in focus from a programme-led approach to the embedding of those requirements.

As the collective voice for the banking and finance industry we are keen to understand how our members are matching up against regulatory expectations and identify opportunities to achieve a closer alignment. Below are some key findings from the survey that we’ve assessed against recent statements from the Bank of England (BoE). These emphasise a desire to see firms’ approaches to setting IBS converge over time.

Number of important business services (IBS)

Across all three surveys there has been a consistent reduction in the number of IBS per division reported by firms. 89 per cent of respondents said they currently have between one to ten IBS per division and 11 per cent said they have between 11-30. No respondents reported more than 31 IBS in any division. This is a marked change from the first survey in May 2021, where 73 per cent of respondents reported one to ten IBS and 23 per cent reported 11-30, and four per cent reported 31-60.

In conversations with UK Finance, members attributed the gradual reduction of IBS over the last year to a maturing of thinking around the application of the policy statements and a better awareness of what services are most important to their customer base. The logistical challenges presented by many IBS was also cited as a reason for a reduction in the number of IBS.

Survey responses show a consistent move toward IBS consolidation across all member categories. This appears to be an area where firms’ approaches are converging and aligning with BoE expectations.

Granularity

Our survey showed a wide variety of approaches to granularity amongst respondents, with no clear trend toward more granular or less granular IBS identification methods over the last year. Despite this, 76 per cent of respondents reported that they have no plans to change their IBS naming conventions and revisit the level of granularity to which they have defined their IBS. From conversations with members, this appears to come down to the amount of financial and time resources firms have already invested to date in IBS identification, as well as a recognition of the unique nature of each firm’s business model.

The BoE has indicated that there is value in firms working towards greater consistency on the issue of granularity, However, with members now largely pivoting to the new 2025 deadline, it appears that their focus is likely to remain on embedding operational resilience into BAU processes rather than revisiting questions of granularity.

Over the coming months the operational resilience team will be working with our workstream sponsor Capco on our implementation workplan. This will focus on discussing members’ approaches to operational resilience and exploring further other findings that have emerged from the benchmarking survey. If you would like more information or wish to discuss the benchmarking survey, please contact Kaitlan Billings at kaitlan.billings@ukfinance.org.uk.

 

 

You may be interested in

The impact of the ESG on financial sector supply chain relationships

27.06.22

Blog

The impact of the ESG on financial sector supply chain relationships

The term Environmental, Social and Governance – better known as ESG – has become synonymous with a global movement towards a better world, a world of greater diversity and inclusion where there is wealth and opportunity for all.