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Credit Unions: Exploring Digital Transformation and Operational Resilience

In April 2021 the Central Bank published their Consultation Paper on Operational Resilience. The consultation is a prelude to finalising guidance to industry on how to prepare for, respond to and recover from an operational disruption that affects the delivery of critical services. Given that the Central Bank recognises IT as supporting most, if not all, of the critical business functions within financial institutions the guidance is expected to highlight technical failure as one key potential source of disruption. The guidance is also likely to reiterate supervisory expectations in areas like cyber security, business continuity and disaster recovery.

The Case for Digital Transformation

At Viatel, some of our key clients are financial services providers. We appreciate that the sector operates in an increasingly complex and interconnected environment. Technology continues to evolve as does consumer behaviour. We see our credit union partners coming under increasing pressure- accelerated by the impact of COVID-19- to marry their strong community presence with a strong digital presence. Credit union members, like the customers of any financial institution, require their provider’s systems and data to be available, reliable and secure. Beyond customer expectations, the potential of digital transformation to empower credit unions to digitise services, prepare for growth and improve data protection is immense.

Mitigating Digital Risks

Proposed European legislation (DORA: Digital Operational Resilience Act) highlights the need for organisations embracing digital transformation to mitigate associated operational risks. It is essential to note that DORA does not seek to deter financial institutions from following a digital path. On the contrary, it is designed to develop a ‘digital ready Europe’. We note that the Central Bank acknowledges that not all potential hazards can be prevented. However, at Viatel we believe that digital transformation- properly executed- and embracing the network of the future will actually help our customers to minimise technology failure as a possible source of disruption.

Networking for Operational Resilience

Resilient systems are a fundamental pre-requisite to operational resilience. From the network perspective, eliminating legacy infrastructure and solutions patched together as credit unions amalgamated or grew is an essential step towards eradicating IT failures, outages and cyber-attacks. Modernising network architecture is also a massive opportunity to enhance business continuity and disaster recovery mechanisms. Multisite organisations can nominate one or more branches as back up sites. Once recovery mode is activated a fully automated process kicks in to keep branches fully operational. Security is enhanced with a fully encrypted network between sites. Business continuity is promoted by managed failover between primary and backup links. Monitoring is a critical capability under operational resilience. Modern, software-defined networks offer increased visibility of security incidents and updates through a single pane of glass so that any impending new reporting requirements can be easily met.

Why now is the time for action

Responses to the Consultation Paper on Operational Resilience will be accepted until 9 July 2021. Once the consequent guidance is published, the Central Bank expects regulated firms to demonstrate its application within an appropriate timeframe. Making this the perfect time to start considering the impact on your own organisation.

Join Viatel for Exploring Digital Transformation

Credit union employees and representatives are invited to join Viatel for 'Exploring Digital Transformation' on Tuesday 11 May at 2pm. Our expert team will be joined by Al McCauley, CEO of Heritage Credit Union. We will shine a special spotlight on operational resilience as part of this informal and informative session. Register for free for this online event here.


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