How Technology in Banking Can Reduce Operational Risk – Daily Business

When a bank’s systems go down, customers notice within minutes. They can’t pay bills, move money or check their balance. For the bank, fines, refunds and lost trust follow. Better technology won’t remove every risk, but it can cut many of the most common ones down to size.

What operational risk looks like in practice

Operational risk is the chance of loss from failed processes, people or systems. In banking, the system part tends to get the headlines. The TSB case is the one most people in the UK remember. In April 2018, the bank moved customer data to a new platform, and the platform failed almost at once. A large share of its 5.2 million customers were hit, and it took until December 2018 to get back to normal.

The FCA and PRA later fined TSB £48.65 million in total. The bank also paid £32.7 million in redress to customers. Regulators said it had failed to properly organise and control the programme.

Outages are still common

TSB was not a one-off. The Treasury Committee gathered data from nine UK banks and building societies. Between January 2023 and February 2025, they reported at least 158 IT incidents, adding up to 803 hours of outages. That is roughly 33 days.

The most common causes named were problems with third-party suppliers and planned changes or upgrades to systems. Many banks run on old, tangled systems where one change can break something else.

The rules have raised the bar

Since 31 March 2025, UK banks have had to meet the FCA and PRA operational resilience rules in full. Firms must name their important business services. They must set an impact tolerance for each one, which is the most disruption they will accept, mostly measured in time. They then need to show they can stay within it during a severe but plausible event.

That is hard to prove on a system nobody fully understands any more.

Where modern technology helps

A modern core removes a lot of the fragile links that cause trouble. Here is where it makes a real difference:

• Real-time data. Risk and compliance teams see what is happening now, not what happened last night.
• Clear audit trails. An event-based ledger records every change, so you can rebuild an account’s history and settle disputes faster.
• Less manual work. Fewer spreadsheets and hand-keyed fixes mean fewer human errors.
• Safer changes. When products are separate from each other, changing one doesn’t put the rest at risk.

SaaScada, for example, offers cloud-native core banking solutions built on an event-sourced ledger, with an immutable audit log and ISO 27001 and SOC 2 accreditation. Its design keeps reporting and compliance work separate from live transaction processing, so heavy queries don’t slow down payments.

Change carefully, not just quickly

New technology brings its own risk if the move is rushed. The TSB story is a migration story as much as a systems one. Good planning, real testing and strong control over suppliers matter as much as the software.

Start small where you can. Test your important business services against tough scenarios. Keep a close eye on any third party you rely on.

A practical next step

Look at your last few incidents and ask what caused them. If the answer keeps coming back to old systems, manual fixes or risky changes, the technology is part of the problem. Fixing it steadily is one of the clearest ways to lower operational risk and keep regulators and customers on side.