There were some important lessons to be learned regarding payment systems and business continuity in the aftermath of the events of 9/11. What were these and what you should be doing if you are in any way involved in the operations side of your organization’s payment system?
The Bank for International Settlements definition of a payment system states; “A payment system consists of a set of instruments, banking procedures and, typically, interbank funds transfer systems that ensure the circulation of money” (From “A glossary of terms used in payments and settlement systems”, Committee on Payment & Settlement Systems. BIS, Basel. March 2003).
Despite this we often associate the word “system” with only the technology; the bits and bites, the hardware and the software. We tend to forget that there is a lot more that goes into making up a payment system.
A further problem is the user’s perspective, and in the case of a bank this is often from that banks own point of view – a view that only concerns the bank itself. The outside world is seen as exogenous to the bank’s “system”. This is often the view taken when considering such critical issues as disaster recovery and business continuity planning. What is often overlooked is the big picture – the users, the clearing system and the settlement agent.
This total picture is something that was very clearly illustrated in the effect that the events of 9/11 had on the payments system in the United States generally, but more specifically in lower Manhattan. The aftermath of the 9/11 events clearly illustrated this - that disaster recovery and business continuity planning had been too focused on single localized events and assumed that all the other system components would remain intact.
The major lessons learned were;
Business continuity planning needs to be made far more robust. Revised plans should include the ability for a rapid resumption of critical operations following the loss or inaccessibility of staff in at least one major operating site; or following a wide-scale, regional disruption. It is vital that all critical internal and external continuity arrangements are effective and compatible.
Mobile Manners
The mobile phone has become ubiquitous. It is the one hi-tech device that has become the universal calling card for humankind. Yet despite the privilege and the benefits that this instrument bestows it has turned many folk into rude bores bereft of any manners in their slavish obedience to this twenty-first century icon.Is the Financial Crisis Really Over?
To really fix the financial and banking system governments and regulators need to get to the core of the problems that led to the 2007-9 financial crisis. The evidence so far indicates that the current approach has failed and that throwing money at banks is not a part of the solution. Unless the authorities can get the “fix” right we are facing ongoing crisis as banks revert to their old ways with little regard for anyone but themselves.Mobile Payments & Remittances – Dangers Ahead
The use of the mobile phone for the transfer of workers’ remittances and for small payments holds much promise, especially in Africa. However two problematic issues threaten the mobile revolution. These are the attitude of the banks to their prospective clients and the attitude of bank regulators to non-bank participants.