Don’t Let "Technical Debt" put your Reputation at Risk

If you ask most financial services CIOs, they’ll say their “wake up in a cold sweat” nightmare is about a system they are responsible for causing an outage that generates embarrassing headlines like this, this or this.

These kinds of incidents have immediate consequences as customers close accounts and regulators levy fines, but the lasting impact, which can be far greater, is the damage to the firm’s reputation. The market has always had a long memory, and the stakes are higher than ever after a five year period marked by scandals and gaffes that have seen public sentiment turn against the banks in general.

In a conversation with the CIO of one of our banking customers, he pointed out that reputational risk has become one of his top priorities and something that’s always front of mind when selecting a technology or designing a new project.  He explained that he has come to view complexity as the main driver of risk, and therefore public enemy #1, and his project priorities have been affected accordingly.

Across the industry, the biggest risk factor for financial services systems is the layers of complexity that build up as generations of applications and infrastructure evolve and age over time. Innocent looking changes often lead to unintended consequences as they affect the behavior or performance of existing systems. There was a very good article earlier this year on the BBC’s website describing the causes of this problem, tying it to the concept of technical debt.

Technical debt is what you incur when your timeline or budget requires you to cut corners on a project, or perhaps you outgrow one technology, but avoid upgrading and work around the limitation to keep things going short term. Eventually you have to go back and address this problem before it presents –you guessed it – reputational risk.

What’s that mean? The best way to sleep well at night is to keep your system as architecturally and operationally clean as you can, and avoid cutting the corners that incur technical debt you’ll have to pay for later.