CBN’s stake on banks’ IT standards, compliance

The banking industry’s Information Technology (IT) architecture, just like every other aspects in the sector, has had its own reforms, in the recent times. Of course, the aim is to ensure that banks adopt global best practices, as the Central Bank of Nigeria (CBN) takes the lead in introducing guidelines and framework for the industry.

Retrospectively, the need to define IT Standards for the industry arose in 2010 during the industry infrastructure transformation programme, where CBN in conjunction with the Bankers Committee sought to identify ways to reduce the significant high cost to income ratios of banks within the industry as well as improve operational efficiency.

IT, which is the key driver of the banking sector, was then lacking in global best practices, limiting banking operating efficiency, cost effectiveness, regulatory information and risk management practices.

But to address this gap and provide guidelines for application and utilization of Information Technology, Industry IT Standards were defined to articulate and provide a point of reference, which however, cut across different IT capability areas and include those to improve information security, IT service management, systems availability and information exchange.

This transformation programme, to date, is coordinated by the Shared Services Office in the Central Bank of Nigeria and is the driver of the collaborative strategic response by the Financial Services Industry (FSI) to realize the much-sought reduction in the industry’s yearly cost base.

Perhaps, to get effect a smooth implementation sequence of the guidelines, the apex inaugurated IT Standards Council, with two-year tenure under the supervision of former Deputy Governor of CBN, Tunde Lemo, in 2013, with the mandate to drive the adoption, implementation and compliance to Industry IT Standards for the nation’s FSI.

The apex bank had last year, released new document on IT standards, which it said, would provide guidelines for and serve as further reference points in ensuring the quality of its service delivery in the Nigerian banking industry.

The circular, signed by the CBN Director for Information Technology Department, John Ayoh, had explained that there is a five-year implementation roadmap for the IT standards within which banks were expected to implement in accordance with the set timelines and the defined priorities had also been identified.

Furthermore, it stated that implementation would be in a continuum approach such that initial implementations would target “maturity level three and subsequently improved to include certification and higher maturity levels.”

But there seems to be further reforms in the offing, as CBN, in collaboration with the Information and Technology Standards Council is set to review the IT standards blueprint in the banking sector, with the aim of aligning the IT standards in the sector to current realities and trends in the financial sector.

The IT Standards Council, a body set up by the CBN, is also planning to drive an industry-wide remediation exercise on the gaps identified during the baseline assessment that was conducted on banks last year.

Reviewing the achievements of the current IT Standards Council members, which would end by next month, the Deputy Governor, Operations, CBN, Alhaji Suleiman Barau, said there was a release and publishing of the IT Standards Blueprint to industry in January 2014.

There were also, the hosting of the blueprint on the CBN website; development of an aggregate rating system that will be used to rate the compliance of banks individually and as an industry to the set standards; and the conduct of a baseline assessment of three priority IT Standards on the Deposit Money Banks to determine their level of compliance to the standards.

Barau, who commended the outgoing council members for their achievements, assured of the CBN’s continued support for the council and reiterated that the mandate given to the council was an important one that would go a long way to driving the adoption of world-class IT standards in the Nigerian financial services industry, and enable the industry to reap the full benefits of its investments in information technology.