UK stress testing results show ‘resilient’ banking system
17 December 2019 London
Image: Shutterstock
The Bank of England (BoE) 2019 stress testing has found that the UK banking system is resilient to deep simultaneous recessions in the UK and global economies that are more severe overall than the global financial crisis, combined with large falls in asset prices and a separate stress of misconduct costs.
BoE explained that the UK banking system would, therefore “be able to withstand the stress and continue to meet credit demand from UK households and businesses”.
Commenting on the UK banking system stress testing in advance of the results, Ben Saunders, vice president of consulting at Contino, an enterprise DevOps and cloud transformation consultancy, said: “Once again banks have been put through the ringer – forced to prove they can survive some of the most severe scenarios that could threaten the stability of the whole financial services industry.”
Banking stress tests assess how banks can cope with severe economic scenarios. The BoE looks at a banks’ resilience and aims to make sure they have enough capital to withstand extreme shocks and are able to support the economy.
However, according to Saunders, the pressure is coming from regulators to improve auditing and reporting processes.
Meanwhile, making sense of the flood of data that banks process on a daily basis requires the ability to access data at speed, analyse in real-time and uncover unknown patterns through data visualisation techniques, Saunders highlighted.
He concluded that banks cannot afford to ‘rest on their laurels’ now they have mastered stress testing, adding that the regulators will continue to demand more.
“To be prepared to face up to the risks coming around the corner in the next decade, banks need to be able to use the data available to support day-to-day operations,” Saunders stressed.
According to Saunders, from understanding risk posture, to capital planning and guiding strategic thinking, banks must use data to predict the future and stay on their toes.
BoE explained that the UK banking system would, therefore “be able to withstand the stress and continue to meet credit demand from UK households and businesses”.
Commenting on the UK banking system stress testing in advance of the results, Ben Saunders, vice president of consulting at Contino, an enterprise DevOps and cloud transformation consultancy, said: “Once again banks have been put through the ringer – forced to prove they can survive some of the most severe scenarios that could threaten the stability of the whole financial services industry.”
Banking stress tests assess how banks can cope with severe economic scenarios. The BoE looks at a banks’ resilience and aims to make sure they have enough capital to withstand extreme shocks and are able to support the economy.
However, according to Saunders, the pressure is coming from regulators to improve auditing and reporting processes.
Meanwhile, making sense of the flood of data that banks process on a daily basis requires the ability to access data at speed, analyse in real-time and uncover unknown patterns through data visualisation techniques, Saunders highlighted.
He concluded that banks cannot afford to ‘rest on their laurels’ now they have mastered stress testing, adding that the regulators will continue to demand more.
“To be prepared to face up to the risks coming around the corner in the next decade, banks need to be able to use the data available to support day-to-day operations,” Saunders stressed.
According to Saunders, from understanding risk posture, to capital planning and guiding strategic thinking, banks must use data to predict the future and stay on their toes.
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