Dave Allen, Vice President and General Manager, Northern EMEA, NetApp
Many of us today take how we bank, transact, or make a purchase for granted. Yet, the reality is that tremendous innovation in technology has shaped the financial services industry in ways that distinguish the sector from many others, such as government or healthcare. The financial services industry globally is more demanding – and less forgiving – than ever before. Customers are savvier, oversight is tighter and competition is intensifying.
There is no doubt that for the foreseeable future, the industry will continue to operate with increased regulatory oversight, expectations to improve governance, and pressure to optimise capital and costs. These factors are playing a key role across the financial services industry, driving risk and technology investments. For example:
- Financial markets – investors and traders require simplified, scalable IT solutions to compete on a global scale. IT needs to deliver the high-performance computing, big data analytics, and performance required to model, analyse, assess risk, and achieve regulatory compliance in real time.
- Banking – these institutions are facing new regulatory pressures, increased use of mobile applications and social media, more customer centric banking, and changing business models. IT has to underpin the risk management, real time data analytics, and cloud computing solutions that banks now need. They have to manage risk, deliver services with the customer at heart, and enable the development of new products, all while remaining in budget and promoting cost effectiveness.
- Insurance – regulatory environments and customer demands are forcing insurance companies to improve their analytical models to better compute risks and determine profitable cost structures. Data management technologies can give insurance firms a competitive edge. Insurance firms process huge volumes of data, whether it’s looking at natural disaster trends, or creating predictive models for risk.
The main areas of technology adoption and growth are around analytics, cloud, mobile and social media. Technology has created a wealth of opportunities in the financial services industry such as peer-to-peer finance, crowd funding and one touch payments. Technology is helping the industry to evolve, providing consumers with easier and better services, and businesses with the wherewithal to create real differentiation in their area resulting in greater competitive edge.
For a moment let us examine the role of cloud computing in the financial services industry. The cloud was originally the remit of retailers, perfectly suited to handle the peaky nature of online retail traffic during high volume periods such as at Christmas. However, financial businesses are rapidly adopting the cloud, now that the wealth of cloud hosted services has expanded beyond simple compute and storage. IT infrastructures are evolving to include cloud capabilities enabling financial services companies to achieve significant operational and cost benefits.
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Overall, most implementations are private cloud with some hybrid cloud scenarios, as financial services organisations need to maintain strict control of their data, wherever it resides. The general cloud model across enterprises is moving towards a hybrid model – combining on-premise private cloud infrastructure with that of public cloud services from providers such as Amazon Web Services, Microsoft Azure or SoftLayer. In the financial services sector, to implement a hybrid solution requires a safe way to extend the “digital walls” as regulation stipulates that data cannot leave the premises of the company. What financial services firms require is unified architecture that can connect disparate environments, making all data available everywhere, but whilst maintaining the high level of security and privacy that is needed.
Needless to say, technology has, and continues to revolutionise the financial services industry. Only a few years ago the idea of accessing your bank account via your mobile phone was new. Now, it is a commonplace, trusted and key service offered by many retail banks. It is innovations like these that exemplify the methods banks and other financial services companies are using to attract and retain their customers as well as transform their back end IT solutions. Speed, efficiency and cost effectivity is now the name of the game, and it is through new technology advancements that this is possible.