WASHINGTON — The head of the Federal Deposit Insurance Corp. said on Wednesday that banks’ reliance on outdated legacy systems was her “No. 1” longstanding concern for the sector.
Asked what she would change about the banking system if handed “a magic wand" during a virtual conference hosted by the Consumer Bankers Association, FDIC Chair Jelena McWilliams zeroed in on the potential for cumbersome software and outdated internal processes to impede bank business and even threaten the sector’s resilience.
“There are several things I would like to see done differently within the banking system, but I will say No. 1 is something that concerns me on a longstanding basis, which is the legacy systems,” McWilliams said.
The FDIC chair invoked her experience as a bank lawyer, when she served as chief legal officer at Fifth Third Bancorp between 2017 and 2018. “I think a lot of these banks — and I've learned this firsthand when I worked at a bank — a lot of these banks have legacy systems that frankly are impeding their ability to move forward,” McWilliams said.
As part of the agency’s FDiTech initiative, the FDIC announced over the summer that it was seeking feedback on a potential program that would allow technology firms to receive “
“It becomes very complicated when you're bogged down by legacy systems and an ongoing contract that you have, whether it's with your core processor or other entities, or simply the legacy computer systems you have within your organization — it becomes really difficult to manage all that in a safe and sound manner and not have any issues,” McWilliams said at the CBA event Wednesday.
“I would say that if we could scratch everything and start anew, that would be wonderful,” the FDIC chair added. “We can't, but anything we can do to improve resilience in our system would be good, and I think technology is something that we need to be open to there.”
