FSA: £1bn needed to fix financial IT

The Financial Services Authority (FSA) on Wednesday called for substantial investment in banking IT, as part of proposals to speed up the time it takes for customers to get their money back when a bank fails.

The FSA estimates the required changes in IT structures within the banking industry will cost £891.8m for initial investment and five years' worth of running costs. It will cost the FSA itself £1m to bring its own systems into line.

According to the FSA's report on the issue, IT departments will face three main requirements: the need to cleanse data; the need to clearly indicate or flag accounts belonging to all depositors who are eligible under the Financial Services Compensation Scheme; and the provision of a single view of a client's total business with the bank, or single customer view (SCV).

On the first requirement - cleansing data - the FSA said "deposit-taking firms would be required to ensure the existence, completeness and accuracy of all data required" for each depositor, and to flag those that are eligible to ensure a swift pay-out.

An SCV is "a reliable and consistent view of all aggregate deposits for each eligible depositor" and will be a minimum requirement, the FSA suggested. Banks will need to keep an SCV for all the customers they do business with and each will need a unique identifier.

The consultation paper will require comments by 6 April, 2009.

Original article: FSA asks for billion-pound fix in financial IT from ZDNet UK