Source: Reserve Bank of Australia
Today I am going to talk about our recent experience at the RBA in using digital capabilities to support our organisational response to COVID-19. This experience has been informed by a sustained period of technology uplift at the RBA and an ongoing approach of adding digital capability to our core operations. Central to this discussion is the answer to the question, ‘How do you deal with the challenges of disruption and growing technology complexity?’ In answering this question, I will explore how digital capabilities have contributed to the RBA’s organisational response to COVID-19. The first of these is the progressive adoption of extensible digital platforms, the second our ongoing focus on digital collaboration across the Bank and industry, and the third is our transition towards a digitally skilled workforce. I will highlight how each of these digital capabilities has contributed to the Bank’s response to COVID-19 and is preparing us for the challenges ahead.
As CIO of the RBA, I’m often faced with the question, what role does technology play at a central bank? In answering this question, it’s important to observe that technology supports many of the services the RBA delivers for the Australian people. The RBA’s key responsibilities encompass the conducting of monetary and payments policy, maintaining a stable financial system, issuing the nation’s banknotes and providing banking services to the Australian Government.
As part of its core operational responsibilities the RBA facilitates payment settlements across the nation’s banking sector, a role that has gained further operational significance with the rollout of Australia’s New Payment Platform (NPP) for real-time low-value payments. In the provision of banking services to the Australian Government the RBA is also intrinsically involved in the delivery and collection of payments for millions of Australian citizens in our service to Australian government agencies, including the Australian Taxation Office, the Department of Finance and Services Australia.
Each of these RBA services relies on significant digital platforms, a technology-savvy workforce to support their implementation and operation, and close collaboration across the RBA, government, and diverse industries including the financial sector. In delivering digital services, the RBA has had to face the familiar pressures of ensuring the continuous availability of systems, securing their operation in the face of growing cyber threats, and increasingly assimilating an ever-growing variety of emerging technologies. Disruption and growing technology complexity have been part of our world for some time.
In the face of the social and economic shocks of COVID-19, technology pressure points have been amplified in unprecedented ways. In the case of the RBA, the Bank’s technology arm has had to deliver – with unprecedented agility – support for the country’s banking and economic policy response to COVID-19 while securely managing a shift to remote operations for key systems. Today I want to share with you how key digital capabilities are enabling us to address this challenge.
The Convergence of Disruption and Growing Technology Complexity
With the digitalisation of banking and payments and the move by government towards delivering digital services to the public, the RBA finds itself at the intersection of digital disruption across a variety of areas in which it operates. Escalating cybersecurity threats, Fintech innovation in banking and payment sectors and blockchain-based variants to conventional central bank fiat currency all touch on key aspects of central banking operations. The combined impact of these factors contributes to the potential for digital disruption and the growth in technology complexity at a central bank. This manifests in increasingly sophisticated security controls, a continuing pipeline of technology-enabled initiatives, highly interdependent technology risks, and an increasingly diverse technology landscape. With this increasing digitalisation, there has come an increase in technology complexity.
For the Bank, contributors to this complexity include:
- the digitalisation of platforms that underpin our role in banking, payments and financial market operations
- the complexity of integrating these platforms both within the Bank and into industry
- the demand for increased data analysis and insight to fulfil our policy responsibilities
- the increasing cyber and operational resilience demands of digital platforms.
These drivers contribute to an increasing volume and variety of technologies managed by the RBA, each of which must be operated in highly available and secure environments. The current COVID-19 economic response has exacerbated these pressure points by:
- requiring rapid platform changes to implement economic policy measures
- supporting Australian government banking requirements
- operating an increasingly remote workforce, and
- mitigating emergent cyber-related threats.
Over the last six months, it has been anything but ‘business as usual’ for our technology teams. I’ll share our response to these challenges in the time remaining.
Addressing the Challenges of Disruption and Technology Complexity Using Digital Capability
Digital capabilities have supported the RBA’s organisational response to COVID-19. I laid out in a previous speech how we have transformed the Bank’s IT operations and delivered a range of digital platforms underpinning its charter functions of monetary and payments policy, financial stability, payment settlement operations, government banking and banknote production. While these digital platforms are designed to position the RBA well to address the challenges of Australia’s economic future, they have also provided an agile, secure and stable foundation to underpin the Bank’s policy and operational response to the pandemic.
I noted that the uplift in the RBA’s digital capabilities has to date concentrated on three focus areas – the establishment of extensible digital platforms, digital collaboration across the Bank and industry, and transitioning to a digitally skilled workforce. Each of these has contributed a key element to the Bank’s overall lift in digital capability.
- Extensible Digital Platforms – The RBA’s charter functions and services are built on platforms that are both extensible and integrated internally across the Bank and with the industry. These include digital payments, banking, treasury management platform and data platforms. They are designed to be both operationally and cyber resilient.
- Digital Collaboration across Bank Functions and Industry – Digital capabilities are not limited by organisational boundaries. For the RBA this means new collaboration between the Bank’s policy, operational and IT functions – and deeper collaboration across industry.
- Digitally Skilled Workforce – Cross-functional digital skills demand an enterprise-wide approach to skills management and a continuing focus on building essential digital skills. For the RBA this has encompassed cybersecurity, machine learning and data science competencies.
None of these digital capabilities are unique to the RBA. I see these elements as contributing to the success of most organisations in today’s interconnected economy. They underpin the success of today’s so-called ‘digitally native’ organisations and are capabilities that conventional organisations are embracing to ensure their success going forward. Such digital capabilities should be identified early, be given continuing focus, and be adaptive to ensure an organisation remains responsive to its environment.
I want to share more specifically how our approach to building digital capability has supported the Bank’s economic and organisational response to COVID-19. I hope there may be some useful lessons to you as IT leaders as you support your organisations and navigate through the challenges we currently face.
Extensible Digital Platforms
The RBA has progressively implemented resilient platforms to consolidate functionality for key operational and policy domains. These platforms provide key services for government banking, payments, market operations and data analysis. The RBA’s digital platforms are characterised by both their extensibility and integration.
The nature of a digital platform is its foundational service to other, broader functions. Extensibility and integration are key characteristics of platforms over conventional technology applications. The nature of the term ‘platforms’ alludes to their foundational underpinnings, being intended to be built upon and extended over time.
The extensibility of platforms means that new functions and features can be built onto existing systems, avoiding the need for the design, build and testing of base functionality, and allowing the emphasis on value added capability that directly addresses the needs that must be delivered quickly. To achieve this, platforms should be componentised, and allow for new features and their ready integration into internal and external systems and services. Using standardised integration capability is a key feature to providing this extensibility.
The RBA’s deployment of extensible digital platforms has supported the Bank’s response to recent flood and bushfire disasters and COVID-19. Some of the examples of the utility of this digital capability to the Bank’s policy and operational response to the pandemic include:
- Banking: The Bank’s core banking, Cloud API integration and payments platforms were used to support the rapid rollout of financial hardship payments (examples include Pandemic Leave Disaster Payment, JobKeeper, Coronavirus Supplement, and ongoing family and domestic violence payments).
- Financial Markets: The Bank’s treasury management platform supported the RBA’s three-year $200 billion Term Funding Facility to encourage business lending.
- Payments: The RBA’s Fast Settlement Service underpins the NPP and provides core infrastructure to enable real-time payments settlements across retail bank accounts. This supports emergency benefit payments made by the Department of Human Services, disaster relief and rapid financial stimulus.
- Data: The Bank’s data platforms have been extensively deployed to on-board and analyse new economic data sets to support policy setting and financial stability management as part of the COVID-19 response. Example data include the household survey data, non-listed company financial data and job listing data.
The current COVID-19 pandemic has highlighted the need for enterprises to respond with speed to changing conditions and the role of technology in implementing these changes at scale. Extensible digital platforms provided key support for the RBA’s operational and policy response to the pandemic and demonstrate the importance of digital capability in contributing to organisational and, in the RBA’s case, national economic resilience.
A key outcome of a successful digital transformation is an organisation’s ability to collaborate across its own diverse functions and with the broader ecosystem in which it operates. The RBA is no different and this requirement to collaborate has informed the technology uplift the RBA has undertaken over the past several years.
Collaboration often manifests an engagement with parties outside your immediate responsibility or accountability to address common challenges or objectives. The reasons and means for parties to collaborate may vary, but the outcome is almost always an improvement on unilateral action. The interconnectivity of supply chains and dependence on third-party provided services has elevated the need for parties to collaborate. As system designs inevitably reflect the processes they support, these too have evolved to support stronger collaboration across organisational boundaries.
Many of the RBA’s core functions involve a deep level of information exchange and operational interaction across a range of financial institutions and broader industry. The Bank receives regular updates on credit information across diverse Australian industries, conducts extensive financial market operations, underpins the execution of billions of dollars of payments on a daily basis, and performs a significant proportion of the Australian Government’s banking services, including processing pension and welfare payments. In today’s economy, a responsive central bank requires strong collaboration across industry to implement its policy objectives and operational responsibilities.
In the context of COVID-19, the RBA’s approach to technology collaboration has seen our government banking and IT operations meet the needs of Australian government agencies to implement government responses to the pandemic. Financial stimulus and welfare payments required rapid adjustment to our banking platforms and near-immediate execution. To plan, design and implement these responses requires cooperation across diverse RBA, government and industry partners.
As with any partnership, the strength of the collaboration is informed by what parties have invested in the relationship during better times. In the case of digital collaboration, our experience has been that three collaborative practices have served us well during the pandemic. Firstly, a collaborative approach to partnering across our RBA IT, policy and operational areas to progressively reduce the technology obsolescence of our key systems. Secondly, the establishment of targets and measures to monitor and improve the quality of our technology collaborations both within the RBA and with key service providers. And thirdly, the close integration of our innovation planning and technology governance functions and their overarching governance by RBA policy and operational areas.
The first of these digital collaboration practices is the close partnership established between the RBA’s IT and policy areas to track and reduce technology obsolescence. Each year our teams review technologies used by the RBA and identify those that are falling out of vendor support and no longer meet the security, stability and functional requirements of the Bank. This is done in collaboration with business and IT areas and informs initiatives to efficiently upgrade systems. Over the past several years we’ve expanded this partnering to also measure the information and reporting quality of these systems. By integrating the reviews into the Bank’s planning cycle, it provides enough time to allow improvements to be planned and investments set aside to maximise efficiency, functionality, stability and security. This habitual collaboration has ensured the improved currency of the RBA’s systems and allowed them to be more readily adapted and integrated to support the Bank’s pandemic response.
The second digital collaboration practice the RBA has benefited from is the measurement of collaboration relationships among both internal technology stakeholders and third-party service providers. Over the past several years we have measured the quality of technology partnerships across a variety of operational, value and strategic dimensions. This has highlighted areas for improvement and amplified best practices across our range of technology support services. ‘What gets measured gets managed’, is a frequently heard mantra in business today. We’ve learned to apply this discipline to the quality of our digital collaborations. Measurement and its embedding into processes and relationships doesn’t mean we supplant the importance of relationships. But, as with many things today, providing data and insights, particularly of patterns and information beyond the ability of any one individual to know or have access to, equips our IT partners with the information needed to take their relationship to a more responsive and performant level.
The third digital collaboration practice the RBA has recently benefited from is the embedding of technology governance into the way the RBA conducts rapid technology investigations. By involving our technology security and architecture teams in our emerging technology investigations, we ensure that potential solutions to emerging or sudden technology requirements can be quickly investigated and, more importantly, implemented with speed once approved. The benefits of this approach have been apparent during the RBA’s recent adjustment to remote working, establishment of the Bank’s $200 billion Term Funding Facility, and execution of the banking requirements of the Australian Government’s pandemic response. Each of these was implemented at speed while maintaining our high security and stability posture.
Our experience at the RBA has been that success in responding to both shocks and operational challenges demands proactive digital collaboration. The challenges we face more often than not transcend our individual IT functions and organisations. In today’s interconnected economy, challenges and crises are rarely constrained to organisational boundaries and accountabilities. A key question to ask ourselves is, ‘How actively are we initiating and investing in the partnerships that equip us to deal with today’s challenges?’
Digitally Skilled Workforce
In addressing the challenges we’ve discussed, the most extensible technology platforms and intensive collaboration will be ineffectual without a skilled workforce skilled. In the same way digital transformation transcends the boundaries of IT transformation, digital skills extend beyond technical capabilities and encompass a range of competencies and new ways of working that characterise today’s organisational landscape. These challenges are not insurmountable, and organisations that place emphasis on their people and their development are well positioned to meet them. I’d like to share with you some of the practices the RBA has applied to staff development to meet the challenge of attracting, developing and retaining a digitally skilled workforce and how this digital capability has supported our response to COVID-19.
As many of you will know, digital skills aren’t easily acquired overnight. A workforce needs to understand the core operations of an organisation, its internal and external stakeholders, and the context in which it operates. You can’t arrive at this level of experience and organisational knowledge by exclusively hiring newly minted graduates. Digital skills involve the conscious coupling of new knowledge with organisational wisdom – they have to be planned for, developed and worked at.
The types of digital skills we are talking about encompass how staff use technologies to make effective decisions in complex situations, how to innovate to solve emerging problems using new and available tools, and how to work collaboratively across organisational boundaries to address new problems. The efficacy of these ways of working is amplified if the staff performing them possess strong knowledge on the roles and accountabilities of the organisation. This is typically something that is hard to acquire from the outside market. For this reason, developing the digital skills of Bank staff with deep organisational knowledge and experience is a powerful supplement to recruiting specialists with required in-demand competencies and skills. At the RBA, we have focused on training and upskilling key teams and staff in ways that have benefited both staff and the organisation during the current pandemic response.
Planning is the key to our approach to digital skills. Without the variety of short-term incentives and remuneration benefits available to some commercial organisations, the RBA has instead relied on planning and a lifecycle-based approach to skills development. In our technology areas, we identify the emergent digital skills the Bank needs to hold and match these to staff whose interests and competencies can be developed in these required fields.
Through stretch opportunities we nurture a cohort of talent that is developing required future skills and then look to embed those skills within the functions of the Bank. Reviewing the inventories of these skills allows us to ensure staff development plans are targeted towards skills that meet the strategic needs of the Bank and, equally importantly, transition skills that are less in demanded to ensure staff retain capabilities that benefit their own careers. Over the past several years this has allowed us to develop necessary skills and ensure this skilled cohort possesses a deep understanding of the RBA and the context in which their skills are applied. This blended approach to equipping a digitally skilled workforce has been demonstrated in two key areas during the current response to COVID-19. First in cybersecurity and then in advanced data analysis.
An example of the need for strong cyber skills was demonstrated in the early days of the pandemic. The Bank noticed a shift in security threats with attackers targeting remote connectivity infrastructure and orienting social engineering attacks such as phishing to capitalise on uncertainties associated with COVID-19. Our cybersecurity team has developed and trained in the ability to respond quickly to novel security scenarios. This skills development was achieved through rapid innovation events designed to test our security staff’s ability to isolate and respond to emerging problems within hours. This training regime equipped our cyber teams with the tools and skills necessary to identify, adapt and respond to emerging threats promptly.
When the need arose to shift a significant proportion of the RBA’s Sydney-based staff to remote working operations, we conducted a rapid review and adjustment to the security controls associated with remote working, including adapting key application access for remote operation. Having established a solution consulting capability in IT Security over the last several years, the RBA was able to deploy alternative remote-centric security configurations rapidly without lowering our security posture. This allowed the team to quickly revert to business as usual security monitoring and control applications, something that has served the Bank well over the past several months when a number of critical industry-wide vulnerabilities have required rapid security response and patching. As we’ve seen in the press, diminished security standards during the pandemic have opened the door to major security attacks and compromises across industry and government.
The development of deep data analysis skills has also proven important to the RBA’s COVID-19 response. Analytical coding practices and machine learning technologies are now increasingly employed by key economic research and policy areas. Having targeted data analytics several years ago, the Bank focused on providing emerging data technologies to policy researchers, targeting innovation and training events on machine learning, and developing a community of interest in advanced analytics. This contributed to the development of key data analysis skills in a broader cohort of Bank staff, which could then be used for novel advanced economic data analysis such as sentiment analysis using machine learning.
It has been our experience that we will suffer and lessen the quality of our policy and operational outcomes if we do not plan and invest in the digital skills of our workforce. To succeed in digital uplift, we often plan our investments, our projects, products and partnerships. But, as digitally maturing organisations, do we invest enough time and effort in ensuring our people are equipped to meet these challenges head on?
COVID-19 has presented us with social and economic challenges unprecedented in recent memory. It has forced us as individuals, our organisations, industries and governments to search deep for solutions to difficult challenges. Some of the tools relied on to meet these challenges have been the digital capabilities we have invested in over the past several years. My experience in running technology at the RBA shows that it is important to build digital capabilities to provide the agility and resilience needed for uncertain times. Digital capabilities at the RBA encompass people, organisational and technological capabilities to respond to disruptions and growing complexity. Extensible digital platforms provide solid foundations on which to nimbly roll out new capabilities. Collaboration allows knowledge and experience to be harnessed across the organisation and industry. An ongoing digital skills focus ensures emerging techniques and ways of working are available to experienced staff for use in novel situations. These digital capabilities are supporting the RBA’s response to COVID-19.
Digital capabilities aren’t all about technology. Our experience shows that they involve the close interplay between people, how we work as teams, and the tools we equip ourselves with. It’s a question I often ask myself as CIO: how do we address this challenge by leveraging the skills of our people, using the technologies available to us, and harnessing our partnerships across the organisation and industry? I hope today’s discussion contributes to your roles as technology leaders supporting your organisations to navigate today’s challenges and setting a path for the times ahead.