The hope is that a stricken bank would soon restore its systems -- hopefully within a few days -- and resume control of its accounts.
Systemic Focus
The aim is to prevent a stampede of retail clients. There’s no plan to expand Sheltered Harbor to wholesale, institutional clients of the firms, according to executives.
For the largest banks, whose institutional client businesses are probably just as large and important as their vast retail networks, the danger is that a disruption would still irreparably harm the company’s reputation and business. But the point is to guard the broader financial system.
In fact, some executives see Sheltered Harbor as a tool for resolution not recovery -- as the regulators unwind the firm that has collapsed due to a cyber attack, its partner can provide access to retail accounts quickly.
“Sheltered Harbor doesn’t address the operational resiliency of member firms,” said Trey Maust, who became chief executive officer of the industry-funded operation this week. “Firms have their own continuity plans, and those typically address how to get back on one’s feet after such a disruption quickly without losing clients or business.”
Complicated Accounts
Because some of the largest banks in the group operate major retail brokerages, data for those accounts already are included in the backups. Yet, organizers are still working out how to provide continuity for those operations.
Offering basic payments capabilities for checking and savings accounts is relatively straightforward. But practices vary among firms for helping brokerage clients buy and sell equities, fixed-income products and other instruments -- making it much more complicated.
“You could have two different partners, one for your checking and savings accounts restoration, one for your brokerage accounts,” said Sheltered Harbor’s Maust. “But both partners need to have transaction capability.”