FI Operational Resiliency Goes Proactive as UK Regulations Loom

UK banking

Bad things can happen to good companies. And with the news Friday (April 12) that instant money movement platform TabaPay is acquiring Synapse’s assets following the latter’s bankruptcy, operational resilience is increasingly top of mind for firms.

Against a macro backdrop embattled by global pandemics and geopolitical tensions, the ability to withstand and recover from financial shocks, is becoming a strategic imperative for long-term success and stability.

So much so, in fact, that the United Kingdom is making operational resilience a requirement for regulated financial entities, as per the U.K. Financial Conduct Authority’s (FCA) policy statement “Building Operational Resilience” (PS21/3) and the Prudential Regulation Authority’s (PRA) Supervisory Statement “Operational resilience: Impact tolerances for important business services” (SS1/21).

In-scope firms, including banks, non-bank payment service providers (such as payment institutions and electronic money institutions) and others, have less than a year to ensure they are following the upcoming requirements, as the March 31, 2025, end to the transitional period is fast approaching.

By next spring, U.K.-regulated firms will need to have first performed mapping and scenario testing, including for cyber-related disruptions, of important business services so that they can remain within impact tolerances for each important business service provided; and second, organizations will need to show that they’ve made the necessary investments to enable their businesses to operate consistently within established impact tolerances.

The FCA and PRA rulemaking is just one proof point underscoring the importance of operational resiliency within financial services and payments, but it serves to highlight the growing need for firms to adapt their operations proactively to today’s evolving threat landscape.

Read more: CFOs’ Top 4 Concerns Reveal Importance of Controlling What’s Controllable

Building Financial Resilience in an Uncertain World

For businesses, the concept of financial resilience has evolved from traditional risk management to strategic resilience. This shift emphasizes not only the ability to respond to immediate threats but also the foresight and flexibility to adapt to long-term changes in the market. Companies are now looking beyond risk avoidance, focusing on building adaptive capabilities that can turn potential disruptions into opportunities for growth.

“Whether the run is three years, five years, 10 years, there will be another crisis. It’s just a matter of figuring out what type of crisis and how that’s going to impact your business,” Angela Floyd, CFO at DPR Construction, told PYMNTS, emphasizing that leveraging concepts like pre-mortem and scenario planning when “the times are good” can offer organizations a valuable way to prepare for the unknown and better protect their balance sheet.

The tangible cost of failing to ensure operational resiliency extends well beyond the abstract, affecting nearly every aspect of a company’s operations.

After all, it was just over year ago that U.S.-based Silicon Valley Bank (SVB) failed and sent tremors throughout the broader banking landscape, and only handful of days ago that Change Healthcare reportedly found itself facing a new ransomware attack following an earlier massive breach in February, while Roku disclosed to its customers April 12 that 591,000 accounts were impacted by two separate cyberattacks.

“Business is a team sport. There are people all around you that have been through situations that you’re about to go through or are in the process of going through. … It’s OK to listen and ask for help,” Marc Mehlman, CFO at Ascensus, told PYMNTS.

Read more: Third-Party Vendors Emerge as Data Security Threat

The Role of Treasury Management Automation

One of the key strategies for enhancing financial resilience is the automation of treasury management. Automation offers a wide array of benefits, including improved efficiency, reduced errors, and enhanced decision-making capabilities.

By leveraging technology, businesses can gain real-time insights into their financial health, enabling them to make informed decisions quickly and effectively. This proactive approach to financial management is becoming increasingly essential for navigating the complexities of the modern economic environment by ensuring that companies have robust systems in place to manage financial shocks.

“The treasury function has definitely increased in importance, and has definitely been enhanced in terms of the versatility that needs to be looked into,” Ole Matthiessen, global head of cash management at Germany’s Deutsche Bank, told PYMNTS in an interview.

“Nobody wants to spend a lot of money on efforts that won’t provide a return in a downturn,” Bas Brukx, CFO at Allego, said in an earlier conversation with PYMNTS.