The rapid rate of digital transformation over the last two years has impacted no region as significantly as Asia-Pacific (APAC) says Guy Warren, CEO of ITRS Group.

But amid racing ahead when it comes to transforming, many financial institutions in the region are failing to develop and implement strategies to ensure the resilience of their operations - and it's beginning to have dire consequences. 

More, with the current geopolitical climate, the threat of potential cyberattacks has escalated - and strengthening operational resilience is the surest way to tighten security. 

ITRS's research highlights the disparity between key regions when it comes to operational resilience. And whilst APAC is striding ahead when it comes to transformation, it's clear that the region's operational foundations must be strengthened in order to maintain this advantage in the long-term.

Rapid rate of change

For years, the banking industry has been on the cusp of critical digital transformation with a wave of new technology revolutionising the way they operate. But, as with most things in sectors largely comprising bureaucratic organisations, things were moving slowly. 

Then, the onset of the pandemic turbo-charged this change. Now, two years on, the challenges and obstacles created by this rapid digitalisation are beginning to show themselves. The problem with transforming systems at such pace is that, without strong foundational infrastructure in place, cracks will begin to show when new IT systems are put under exceptional strain.

Racing ahead

When it comes to digital transformation, our data reveals that APAC is leaping ahead of other regions. 97 per cent of APAC-based firms' IT environments have changed more in the last 12 months than in the lifespan of the firm - compared to just 76 per cent in North America over the same period. And, illustrating the difficulty this poses, 85 per cent of those firms in APAC believe that these rapid changes to their IT environments over the last 12 months have made it harder to maintain client SLAs/SLOs, compared to a global average of just 79 per cent.

So, this is where the problem lies. Whilst on the surface, the data paints a positive picture of APAC charging ahead of global counterparts and competitors when it comes to digital transformation, these changes left unchecked are putting significant strain on the resilience of operations, causing concern for banks, as well as their employees. 

Crucially, this rate of change is leaving some financial institutions in APAC unable to effectively manage their systems, data or security, resulting in a high rate of outages in the region. More than one in five APAC-based institutions are experiencing at least one day of unplanned downtime per year - more than either North America or Europe - despite 92 per cent of firms in APAC believing that their IT solutions can pre-empt issues before they lead to downtime.    

It's clear that this presents a challenge. But how to fix it? 

The future of resilience

Implementing changes from the ground floor will enable banks in the APAC region to strengthen firm-wide operational resilience. Integrating security measures into all operations will result in greater resilience and the implementation of Zero Trust Systems is set to impact how banks approach operational security and risk.

Changes from the bottom-up will have an immediate impact internally, whilst externally, top-down pressure from regulators will be a key driver in bringing operational resilience to the fore at a regional level. In the UK, the FCA's new operational resilience guidelines came into play on 31st March, ensuring that firms report material operational incidents to them to ensure that they can provide specialist expertise to minimise harm to consumers and the wider financial sector. 

And it won't be long before regulators in the APAC region follow suit. The HKMA's recent consultation into operational resilience ended in February, and it's clear that once the date is set, banks in Hong Kong will be racing against the clock to successfully implement the better strategies.

The conversation around operational resilience has too long been overshadowed by other concerns. Rapid digital transformation has provided banks in APAC with the opportunity to expand at scale, but it has also left them vulnerable to unplanned outages and cyber threats.

It's time for action and firms looking to get ahead of the curve should begin formulating plans to strengthen operational resilience now - or face potentially serious consequences later, both from the regulator and the consumer, who is quicker than ever to turn to alternatives in the face of sub-optimal service.

By Guy Warren, CEO ITRS Group