Bank of England admits legacy IT systems are eating into its budget

Bank of England admits legacy IT systems are eating into its budget

Bank of England recently told a Parliamentary Select Committee that "high levels of manual processors and legacy IT systems" were the main reasons behind its expenditure on Information and communications technology (ICT) being 33.6% more than other central Government organisations.

The Select Company noted in a report that the Bank of England spent much more than other government organisations on areas such as technology, property, procurement, human resources, and security.

For instance, Bank of England's expenditure on human resources was found to be 15% above the central government benchmark in 2016–17, its recruitment costs were 68.7% more than central government bodies, and £10 million worth of procurements made by the Bank were approved without consulting its central procurement team.

Bank of England told the Committee that had £2 million worth of purchases been conducted after consultations with the central procurement team, the Bank could have saved up to £200,000.

However, the most critical aspect in the report was that Bank of England spent as much as 33.6% more on Information and communications technology (ICT) compared to other central Government organisations. According to the Bank, the higher cost of its ICT is because it needs to provide round-the-clock service as £600 billion worth of transactions go through the bank everyday.

"High levels of legacy IT systems" used by Bank of England

"The Bank acknowledged that its larger spend on ICT was also due to high levels of manual processors and legacy IT systems. It pointed to the incorporation of the Prudential Regulation Authority which duplicated many applications and required much integration of data systems and data sets.

"The Bank told us that the integration of these systems took a substantial amount of time to deal with, and that its data centre migration programme had been cleansing many of those systems and applications, which took additional time. The Bank acknowledged there was “room for significant efficiency improvements” in areas of its IT," the Select Committee noted.

The Committee added that Bank of England has not routinely and systematically benchmarked the costs of its central services and has few measures to assess the cost-effectiveness of central services. This means that the Bank is spending a lot more on its central services than it should have had it put benchmarks in place.

"The Bank accepted that it needed to be more systematic about its benchmarking. It told us it was reviewing which benchmarks it should use from the public sector, financial sector, central banks and central government, and that it would have benchmarks in place by mid-2019. The Bank committed to using these benchmarks to set its targets from 2020 onwards," the report added.

ALSO READ: Core financial services 'under threat from cyber attack', Bank of England warns

Copyright Lyonsdown Limited 2021

Top Articles

WhatsApp's New Privacy Policy Deadline Has Arrived

At the start of 2021, WhatsApp announced its privacy policy updates, sparking outrage and backlash from its consumers as WhatsApp will share personal information with its parent company, Facebook.

Overcoming the security challenge in remote working environments

The pandemic has changed the way we work. Remote working is no longer a nice-to-have for organisations, but a necessity especially if they want to attract the best talent.

President Biden pens Executive Order to boost US cybersecurity

US President Joe Biden signed an Executive Order this week to boost the cyber security of federal government systems and data.

Related Articles