IT Glitches Place Audit Back In The Spotlight

14/09/2016 by Andy Winterburgh

Recent news saw the role of Internal Audit at the forefront of financial news once again, following a high-profile IT problem that left some of HSBC's customers unable to access their online or mobile banking accounts.

The news followed reports that Natwest and RBS also rang in the New Year with service problems for their customers and led to members of Treasury Select Committee to call for even more to be done across the banking sector.  The Chair of that Committee, Andrew Tyrie, commented that the glitches are extremely “concerning” and indicative of a “systematic weakness in IT infrastructure”. 

New year, new headlines? No, not at all.  Systems built on legacy foundations have been highlighted as the reason behind these issues and have already resulted in all the major banks undertaking a vast number of audits to identify their weaknesses and make the necessary investments for improvement. 

Clearly there is a lot do, so this is still a work in progress, but progress is being made and much more investment in new technology and IT audit resources is planned, something it appears Mr Tyrie may not be fully aware of.

IT glitches that affect customers have been headline news since the banking crisis.  Regulators have been more active than ever in investigating and monitoring banks all over the world, but in the process they have been providing the banking sector with a deluge of regulations. This has led to significant growth in opportunities for talented Governance professionals across all areas, notably in Compliance and Internal Audit.

As a result, Internal Audit functions have moved centre stage within financial institutions. Where they were once viewed as a policing function, the role of Internal Audit has evolved, pushing its way into the boardroom.  And the audit headcount, particularly in IT, has increased and will increase further. But will this be enough to battle the headlines? Probably not.

One problem is that demand for IT Auditors has been outstripping supply for the last couple of years and this year so many banks want to increase resources again. So where is the talent going to come from to enable the banks to be able to increase their headcounts? 

Tapping into different talent pools is one solution. But as much as the financial sector might look beyond the traditional hunting grounds for its auditors, there is no doubt that other sectors will be looking to poach them from the banking world too.  Especially those industries that have multiple sites, deal in sensitive and large amounts of data and that are intensely regulated like the financial sector. 

Fortunately as Internal Audit’s strategic importance continues to grow, it will no doubt become seen as a great place for talented professionals to spend some of their career to develop new skills and gain broader strategic exposure. Our experience supports the view that Internal Audit is attracting professionals from other areas of the business from AVP right up to Chief Auditor level; in fact we placed a FTSE100 Chief Audit Executive who had no previous Internal or External Audit experience.   That said, candidates from the business are yet to move to Internal Audit with enough volume to satisfy the increased demand on their own.

Certainly, from a candidate perspective this is good news for IT auditors across all sectors, as the emergence of new technology will continue to increase demand, leading to numerous exciting new opportunities in the market and potentially salary inflation. Conversely this is less good for Chief Auditors who are likely to see increased attrition and find it much harder to find the talent they require.  This may well result in an increasing reliance on co-sourcing to deliver their Audit plan to ensure Mr Tyrie has no reason to mention their firm’s name in Committee.  

For support in taking the next step in your Internal Audit career or if you have a requirement within your organisation for Internal Audit professionals speak to our specialist team at hybridge. Take a look at the Internal Audit section of our website for available roles or call us on 0207 870 9200 for a confidential chat.