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Accelerating innovation through software-led managed services
Published by Jessica Weisman-Pitts
Posted on September 1, 2022
5 min readLast updated: February 4, 2026
Global Banking & Finance Review®
Company
Published by Jessica Weisman-Pitts
Posted on September 1, 2022
5 min readLast updated: February 4, 2026
Sponsored Feature Presented by Finastra
By Neil Budd, VP, Head of Managed Services, Finastra
According to industry analyst IDC, 71% of financial institutions say their spend on managed services will increase by 20% or more in 2022. This, the analyst notes, indicates a continuing shift to look for partners to operate banking workloads and environments, therefore enabling core end-customer focus and business growth. This is aligned to Finastra’s own findings, where we are being asked by our financial services customers to consider alternative ways in which they can consume the rich functionality of our software through alternative service models that can be consumed over the cloud.
The benefits of traditional managed services, such as reducing the operational burden, accelerating agility, and optimizing cost of ownership, are well-documented, which goes some way to explain why we’re experiencing the continuing shift. This includes freeing up valuable time for IT teams to focus on key business priorities and deliver an improved customer experience. However, simply lifting and shifting a sub-optimal capability to a provider who is tasked with running that service may not be the most effective way to help financial services organizations achieve the outcomes they desire.
Software-led managed services expand on the capabilities of a traditional managed services approach to deliver significant additional benefits on top. This is achieved by using a joint approach between the service and the underlying software to create, deploy and manage modern platforms to better meet evolving business needs. The aim is to use the provider’s scale and focus on the software, combined with industry best practice, and investments in processes, tooling, and automation to help customers derive the best value from their software investment.
This needs to be done with two core focuses in mind:
Fueling the quality of service is the close product proximity that only a software vendor, like Finastra, can offer. When something goes wrong, a traditional managed services provider may not have the deep product or domain expertise required to handle every scenario. In this scenario, they will have to reach out to the software vendor for support. In contrast, a software-led managed services provider can be much more proactive, with the expertise to implement changes faster.
With one vendor having end-to-end accountability through a well-defined service delivery model, financial institutions can ensure they receive quality software, increasing their capacity to innovate and focus on alpha-generating initiatives that set them apart as a business.
To reap the benefits of a software-led approach to managed services, financial services organizations should think about how to maximize success. A key consideration is cultural. Financial institutions need to be comfortable and willing to change their operating model and move away from an environment where they have full control to one where they shift some responsibilities to a trusted partner, freeing up their teams from operational tasks to focus on innovation.
It is much more of a strategic partnership, focused on providing an outcome-orientated service, rather than a traditional client/supplier relationship. This type of model becomes particularly important as IT teams move from the traditional buy, build and customize model, to becoming a conductor of their technology ecosystem, orchestrating different technologies, service models and external partners to accelerate innovation. This requires a paradigm shift in integration harnessing a modern, business object-orientated, open service design rather than the traditional point to point. Reducing legacy integration and failure points strengthens the maintainability and security of the solution.
Once an institution is committed to making the change, they need to find a managed services partner that can deliver security, scalability, and accelerate sustainability goals. Managed services providers must be able to demonstrate the competency and capability to manage data securely. In addition, they need to deliver scalability that enables the organization to grow. Finally, when financial institutions are looking at managed services providers, they should examine the sustainability of that service from an ESG perspective. Financial institutions today are increasingly implementing tight ESG policies as investors seek out firms that meet certain ethical and environmental standards. They should ensure that a chosen provider has an ESG outlook and policies that match their own, including selecting a carbon-neutral cloud provider to host their applications.
To help identify the right managed services provider, a financial institution should ask the following:
At Finastra we offer a mature cloud-based software-led managed service, with a proven track record of delivering value to our customers. We work in a collaborative way, with clear accountability, ownership of service delivery and an outcome-orientated approach to build a strong foundation to innovate.
Learn how Commonwealth Bank of Australia has increased its operational efficiency, reduced risk and become more flexible in terms of offering the services its customers want through Finastra Managed Services.
To learn more about how financial services organizations around the world are leveraging software-led managed services to accelerate innovation in banking, download this IDC report in partnership with Finastra.
Managed services refer to the practice of outsourcing certain processes and functions to improve operations and reduce costs, allowing organizations to focus on core business activities.
Cloud computing is the delivery of computing services over the internet, allowing users to access and store data and applications on remote servers instead of local machines.
Sustainability in finance refers to the incorporation of environmental, social, and governance (ESG) factors into investment decisions, aiming to create long-term value while minimizing negative impacts.
Software-led managed services combine traditional managed services with software capabilities, enhancing efficiency and flexibility in managing banking workloads and improving customer experiences.
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