How the RBA's core banking overhaul helped Australia's pandemic response

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How the RBA's core banking overhaul helped Australia's pandemic response

Accelerated government payments to citizens.

The Reserve Bank of Australia was able to move with speed and begin delivering government payments to citizens as the pandemic unfolded earlier this year thanks to a major overhaul of its core banking systems.

Chief information officer Gayan Benedict told the Gartner IT Symposium/Xpo on Wednesday that the central bank’s new core banking platform had allowed it to “implement government policy and execute it within weeks”.

The core banking platform, which replaced the institution’s “very reliable, but old mainframe platform”, went live just six months before the economic impacts of the coronavirus began to bite in March.

It was introduced as part of the extensive banking technology modernisation that also delivered a cloud-based API gateway, allowing the RBA to deliver government payments and other banking services in real-time using the New Payments Platform.

Benedict said the platform helped accelerate payments to citizens when the government put in place its Covid-19 financial stimulus measures such as pandemic leave payments, JobKeeper and JobSeeker, while continuing to support other day-to-day payments.

“These capabilities, particularly the pandemic specific responses, ... have been addressed in the bank by layering these capabilities onto our existing core banking platforms, which has allowed us to implement government policy and execute it within weeks,” he said.

“In a traditional sense on our older systems, and using our older approach to some of these, it would have taken a lot more effort, and unfortunately perhaps more time to respond to the government requirements that have been imposed on us by Covid-19.

“But because of our ability to rely on more modern digital extensible platforms in the banking space it's allowed us to execute on policy much faster, and actually then get that relief in the economy much quicker, which actually minimises some of the downside risk.”

Benedict said the core banking platform was just one of the systems that gave the bank the “extensibility” it needed to deliver “new functionality  … without having to redevelop and revisit a lot of the core foundational infrastructure”.

It worked with the payments infrastructure, which he said the RBA has “been able to use to implement a lot of the policy decisions, and also the banking requirements that the Australian Government has held with the RBA over the Covid-19 period”.

Similar improvements to financial market trading platforms over the past several years, for instance, also allowed the bank to introduce financial policy like the term funding facility - effectively a source of low-cost funding for deposit-taking institutions - with relative ease.

“From time of concept and policy announcement to implementation again was ... less than a month, and that’s actually very significant because it means that we can actually have interventions and economic policy being implemented in a very rapid timeframe,” he said.

“And so having more modern financial market trading platforms, which we’ve invested in over the last several years, has meant that we’ve been able to adapt, be agile and roll out new capabilities at speed.”

Benedict added that “having these platforms in place … has allowed us to optimise and choose the payment channel that we think is most appropriate, and then execute at scale in very rapid form”.

Digital skills approach validated

The pandemic also underscored the importance of the RBA’s focus on augmenting the skillsets of its existing staff as part of its “long-term planning approach to minimising our external dependence on skills”.

“One of the objectives we have is to augment the staff ... with new skills and new ways of working that are really relevant for some of the challenges going forward,” Benedict said.

He said two really “good examples of where that's come into play in the context of Covid-19 has been cyber security and data science”.

“We've constantly over many years laid a focus around digital skills planning around cyber security, making sure that in our workforce for cyber security we understand what are the skills we need now but also that are coming up,” Benedict said.

“And that was possibly no better experienced during Covid-19, when we had really rapid shifts to remote working [and] we had to completely pivot and we managed some of their operational functions.

“We were able to do so with a workforce that understood intuitively how to secure that changed operational set of context that we had, and also how to make sure they were able to be innovative and use existing processes at scale without having to break things and compromise some of our security postures.

“So having a highly trained cyber security workforce in areas like remote operations and having that knowledge readily available during Covid-19 has meant that we've been able to execute with confidence in a relatively short time frame.”

A similar approach was also applied to developing skills in the area of data science, where the bank has identified a need for “machine learning and the skills associated with that”, Benedict said.

“We put in place a number of events and processes where we've been able to identify economists in this case who have a natural affinity to this type of skillset and give them opportunities to build out their skillset and their knowledge,” he added.

“And that's really been very important for us in providing a very sound and effective and broadly considered economic policy setting in the current context of Covid-19.”

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