The Financial Conduct Authority (FCA) has said that banking chiefs are overconfident and blind to the risks posed by major tech projects.

The FCA revealed that IT failures across financial institutions have more than doubled in the past year, with companies reporting a 138% rise in technology mishaps and faults. There has also been an 18% increase in the number of reported cyber incidents.

According to the FCA, that figure could be significantly higher in reality, as it suspects that companies are under reporting their IT failings. These new figures were collected by the FCA as part of its technology and cyber-resilience survey, which polled 300 firms.

Megan Butler, a senior regulator at the FCA, said during a speech given in London: “We should remember that this is the first year where the total number of debit card transactions has outstripped cash transactions. So you won’t be surprised to hear me say that the FCA is deeply concerned that the number of technology incidents reported to us has increased, with many outages linked to re-platforming and outsourcing failures.

“The most prominent of these is perhaps TSB’s IT migration earlier this year. But we’ve also seen a lot of recent outages caused by relatively small changes, usually made on a weekday evening. We are worried that a lot of firms seem overly-confident about their ability to manage flagship IT change programmes and keep their systems up to date. Yet this is a level of confidence that simply isn’t supported by the data we’ve collected on the ground.”

Institutes Relying on Outdated Systems

During her speech, Butler said that one-third of firms do not perform regular cyber assessments, while nearly half do not upgrade or retire old IT systems in time. She noted that wholesale markets, retail investments and retail lending are the areas within financial services that are particular laggards.

These figures come during a period of increased political and public distrust due to several high profile banking technology outages. TSB, Visa and Barclays have made headlines this past year for their IT problems, which negatively impacted millions of customers. Both the FCA and Bank of England (BoE) are investigating TSB and its senior managers over its massive IT failure earlier this year.

By next month, financial institutes must tell the FCA and BoE how they plan to be better prepared in the event of an IT meltdown. Furthermore, senior managers will be apportioned more responsibility for poor preparation and face higher capital charges for lenders taking insufficient steps.