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Jason Bobb, Senior Vice President of Global Sales and Business Development, Canonical

Jason Bobb

Jason Bobb

CIOs of major banks and financial institutions are today facing a task equivalent to the feeding of the five thousand. While IT systems in the past have always grown, it was comparable to making one casserole for four people stretch to six when two uninvited guests showed up for dinner. Now hundreds of people are coming for food, all day, every day, and they all want different meals, at different times of the day.

This barrage of meal requests is like the complex needs of the staff and customers of a modern-day bank or building society – the challenge is leveraging the power of Big Software. How to learn about it, manage it and deploy it for a variety of use-cases.

Scalability is critical and costs must be kept down, so choosing between public clouds or building your own, all while keeping data secure and systems (including legacy or home-grown ones) interoperable, is the ultimate goal.

Open source has long been a part of these complex IT infrastructures, but with customer data security of the utmost importance (and so heavily regulated) how can financial service providers take advantage of the latest software engineering expertise, protect customers and still maintain a cost-effective operation?

While there is no one-size-fits-all answer to this question, what has become clear is that IT departments need to be the ones leading these strategic conversations.

Banking on software

It’s no secret that, amidst changing regulations, mounting customer expectations and increasing competition from a plethora of fintech start-ups, the banking sector is experiencing some serious disruption.

Financial services has quickly become a software-driven industry. Customers are demanding innovation and want to be able to interact with their chosen bank at a time that suits them, across a combination of both online and offline channels.

This means banks have to be prepared to change how they operate and embrace the era of Big Software through the likes of Software-as-a-Service (SaaS), big data, cloud, containers and microservices. If they don’t, they will likely be overtaken by faster and more innovative competitors.

The introduction of Open Banking has also played a key role in this shift. Open Banking refers to the use of open APIs (Application Programming Interface) that enable third-party developers to access UK banks’ customer data and build applications and services on top.

It is heavily dependent on the use of open source software and, with 99% of payment executives saying their bank plans to make major investments in Open Banking by 2020, will likely be an integral part of the future of financial services.

The challenge is that although these technologies present several opportunities, they also bring complexity. Where applications used to be relatively contained and simple to manage, they now have to be rolled out across hundreds or thousands of on-premise and hosted physical and virtual machines.

Not only does all this have to be accomplished as cost-efficiently as possible, with the right mix of products, services and tools to match the requirements of the business, customer data also has to be kept secure.

To address these issues, organisations have to realise the importance of the IT department in enabling innovation while also ensuring security and business continuity.

Raising the bar for IT

The position of IT across all industries, not just financial services, has been significantly elevated as the Big Software revolution has continued to take hold.

Indeed, many IT departments now enjoy strategic recognition, rather than simply being consigned to supportive, back-office functions. For example, in a recent Brocade survey 97% of respondents recognised the IT department as important to enabling their organisation to innovate and grow, highlighting how IT teams’ knowledge is now frequently tapped into when it comes to shaping strategic direction.

However, there are still challenges that need to be overcome, with nine in ten (91%) IT Decision-Makers (ITDMs) saying there are issues preventing their IT department from delivering on business demands. For example, IT departments often spend large proportions of their time maintaining data security (73%) and legacy systems (63%) which will restrict the time they have available to innovate and digitally transform their organisations.

For those banks that haven’t yet realised the value of IT, now is certainly the time to do so. Technology has already transformed business processes in financial services and, with the growth of Big Software and Open Banking, having access to a robust IT infrastructure that leverages the capabilities of these technologies is only going to increase in importance.

As such, the emphasis for IT teams is now geared more towards building platforms that enable banks to innovate and solve specific business problems, rather than simply keeping the lights on.

With their ability to understand the business value of technology, IT departments can bring a huge amount of value to strategic boardroom discussions. Given the widespread disruption opportunities available to fintech startups, this expertise could prove invaluable.

It’s no secret that technology has significantly changed the way banks and financial institutions work and will continue to do so over the coming years as the momentum behind Big Software grows.

IT teams, therefore, are perfectly positioned to understand these latest digital trends and in turn use cutting-edge innovations to solve their organisation’s specific needs.

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Euro zone factories buzzing in February as demand soars



Euro zone factories buzzing in February as demand soars 1

By Jonathan Cable

LONDON (Reuters) – Euro zone factory activity raced along in February thanks to soaring demand, a survey showed on Monday, although the burst of business led to a shortage of raw materials and a spike in input costs.

Restrictions imposed across the continent to try to quell the spread of the coronavirus have shuttered vast swathes of the bloc’s dominant services industry, meaning it has fallen to manufacturers to support the economy.

IHS Markit’s final Manufacturing Purchasing Managers’ Index (PMI) jumped to a three-year high of 57.9 in February from January’s 54.8, ahead of the initial 57.7 “flash” estimate and one of the highest readings in the survey’s 20-year history.

An index measuring output, which feeds into a composite PMI due on Wednesday that is seen as a good guide to economic health, climbed to 57.6 from 54.6, well above the 50 mark separating growth from contraction.

“Manufacturing is appearing as an increasingly bright spot in the euro zone’s economy so far this year,” said Chris Williamson, chief business economist at IHS Markit.

“The solid manufacturing expansion is clearly helping to offset ongoing virus-related weakness in many consumer-facing sectors, alleviating the impact of recent lockdown measures in many countries and helping to limit the overall pace of economic contraction.”

A Reuters poll last month showed the bloc was in a double dip recession and that the economy would contract 0.8% this quarter after shrinking 6.9% in 2020 on an annual basis. [ECILT/EU]

Rocketing demand for manufactured goods pushed factories to increase staffing levels for the first time in nearly two years.

But lockdown measures disrupted supply chains and factories struggled to obtain raw materials, leading to a big increase in delivery times.

“The growth spurt has brought its own problems, however, with demand for inputs not yet being met by supply. Shipping delays and shortages of materials are being widely reported, and led to near-record supply chain delays,” Williamson said.

Those shortages allowed suppliers to hike their prices at the fastest rate in almost a decade. The input prices PMI bounced to 73.9 from 68.3.

(Reporting by Jonathan Cable; Editing by Hugh Lawson)

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Strong exports lift German factory activity to three-year high in February – PMI



Strong exports lift German factory activity to three-year high in February - PMI 2

BERLIN (Reuters) – Higher demand from China, the United States and Europe drove growth in German factory activity to its highest level in more than three years in February, brightening the outlook for Europe’s largest economy, a survey showed on Monday.

IHS Markit’s Final Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about a fifth of the economy, jumped to 60.7 from 57.1 in January.

It was the highest reading since January 2018 and came in slightly better than the initial “flash” figure of 60.6.

Factories have been humming along during the pandemic on higher foreign demand, helping the German economy avoid a contraction in the last quarter of 2020 and offsetting a drop in consumer spending amid a partial lockdown to contain COVID-19.

Many manufacturers reported higher demand from Asia, especially China, as well as the United States and European countries, with export sales posting their biggest increase since December 2017, the survey showed.

Phil Smith, Principal Economist at IHS Markit, said supply chain pressures intensified as more firms reported delays than ever before in nearly 25 years of data collection.

“There looks to be further upward pressure on inflation in the German economy from supply bottlenecks and a subsequent surge in manufacturing input costs,” Smith noted.

The survey suggested that supply disruption is making it more difficult to replenish stocks, which could complicate production in the coming months, he cautioned.

“Nevertheless, the overriding sentiment for the longer-term outlook is optimism, with a record number of manufacturers expecting to see output rise over the next 12 months.”

Still, economists expect the economy to shrink in the first quarter of this year due to a stricter lockdown, which has shut most shops and services since mid-December, and freezing temperatures that slowed construction activity in February.

(Reporting by Michael Nienaber; Editing by Hugh Lawson)

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Tech demand drives Asia’s factory revival, China’s slowdown puts dampener



Tech demand drives Asia's factory revival, China's slowdown puts dampener 3

By Leika Kihara

TOKYO (Reuters) – Solid demand for technology goods drove extended growth in Asia’s factories in February, but a slowdown in China underscored the challenges facing the region as it seeks a sustainable recovery from the shattering COVID-19 pandemic blow.

The vaccine rollouts globally and pick-up in demand provided optimism for a vast number of businesses that had grappled for months with a cash-flow crunch and falling profits.

In Japan, manufacturing activity expanded at the fastest pace in over two years while South Korea’s exports rose for a fourth straight month in February, suggesting the region’s export-reliant economies were benefiting from robust global trade.

On the flip side, China’s factory activity grew at the slowest pace in nine months in February, hit by a domestic flare-up of COVID-19 and soft demand from countries under renewed lock-down measures.

“The big picture, supported by the latest figures, is that China’s growth remains fairly robust, but it is slowing from previously very rapid rates,” Mark Williams, chief Asia economist at Capital Economics, wrote in a note to clients.

China’s was the first major economy to lead the recovery from the COVID-19 shock, so any signs of prolonged cooling in Asia’s engine of growth will likely be a cause for concern.

With the global rebound still in early days, however, analysts say the outlook was brightening as companies increased output to restock inventory on hopes vaccine rollouts will normalise economic activity.

“The recovery in durable-goods demand is continuing, which is creating a positive cycle for manufacturers in Asia,” said Shigeto Nagai, head of Japan economics as Oxford Economics.

“As vaccine rollouts ease uncertainties over the outlook, capital expenditure will gradually pick up. That will benefit Japan, which is strong in exports of capital goods,” he said.

China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) fell to 50.9 in February, the lowest level since last May but still above the 50-mark that separates growth from contraction.

That was in line with official manufacturing PMI that showed factory activity in the world’s second-largest economy expanded in February at the weakest pace since May last year.

Activity in other Asian giants remained brisk.

The final au Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) jumped to 51.4 in February from the prior month’s 49.8 reading, marking the fastest expansion since December 2018, data showed on Monday.

In South Korea, a regional exports bellwether, shipments jumped 9.5% in February from a year earlier for its fourth straight month of increase on continued growth in memory chip and car sales.

The Philippines, Indonesia and Vietnam also saw manufacturing activity expand in February, a sign the region was gradually recovering from the initial hit of the pandemic. (This story corrects to add name of institution linked to analyst comment in paragraph 5)

(Reporting by Leika Kihara; Editing by Shri Navaratnam)

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