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  1. Why financial institutions need to embrace tech

Why financial institutions need to embrace tech

The financial services marketplace globally is more demanding—and less forgiving—than before. For the foreseeable future, the industry will continue...

Updated: July 4, 2016 9:45 AM
In the past, IT teams managed applications in tightly controlled data centres to ensure security, predictable performance, and data availability. In the past, IT teams managed applications in tightly controlled data centres to ensure security, predictable performance, and data availability.

The financial services marketplace globally is more demanding—and less forgiving—than before. 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 play out across the financial services industry landscape driving risk and technology investments. IT leaders tasked with moving applications to the cloud are understandably hesitant to go “all in” because of the perceived risks.

In the past, IT teams managed applications in tightly controlled data centres to ensure security, predictable performance, and data availability. We have actually seen major technology shifts in the data centre in the past, these shifts at the data centre have just added to the mix in the data centre, increasing complexity and cost. Cloud computing, when done right, has the potential to actually replace, and not just augment, legacy environments while adding value by reducing costs and increasing agility.

In its infancy, even online banking was considered risky. What was important in such transactions was managing identity theft. With cloud too, we are experiencing a basic infrastructural shift to a new IT procurement model. To adapt to this paradigm shift, one will need to tighten the loose-ends and set best practices in place which is expected to take some time. However, to say that people are reluctant to be a part of the cloud will be incorrect. To tackle this challenge, innovative companies have landed on an elegant solutions that addresses both of these challenges.

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Cloud usage models offer tremendous opportunity for financial services organisations to uncover cost savings, reduce capital expenditures, and provide transparency into how computing services are consumed across businesses. Unfortunately, financial firms do not have the luxury of time. These organisations are under extreme pressure to capture, store, and manage the massive volume of data used to run the business. In addition, capex constraints prevent investments needed to expand internal, on-premises data centre facilities.

By moving to a cloud environment, financial services firms are positioned to benefit from the operational and cost efficiencies that can help optimise staff productivity; meet regulations for retention; and reduce error, fraud, and duplication. A cloud infrastructure makes it possible to standardise and simplify IT services and rein in costs.
Similar to other sectors, momentum is around the growth and impact of analytics, cloud, mobile, and social media.

What’s amazing about the financial services market is that technology has created entirely new business propositions in financial services, such as peer-to-peer financing, crowd funding and one touch payments. Google Wallet and Apple Pay are great examples of how technology is evolving the industry and enabling better ease of use for customers’ every day transactions.

In the past we waited for a detailed loan report or credit history, now analytics can serve up information in real-time based on buying behaviours. This valuable data plays a role in analysing risk. It is the back-end technology provides customers with convenient ways of making secure transactions. Almost anywhere in the world at almost any time, we can now bank, trade, invest, etc. all from a mobile phone. This is extremely convenient, but also requires a large level of security for an industry that moves at dynamic pace and great distances.

The financial services industry is rapidly adopting cloud computing. By evolving existing IT infrastructures to include cloud capabilities, financial institutions can achieve significant operational and cost benefits in the delivery of their services. Demands for faster access to information, greater transparency, and improved risk management are driving change and transition. Banks are competing with services like PayPal today and are using the cloud to cut costs. In addition, insurance firms use cloud to increase revenue, the adoption of SaaS for example is strongest in the insurance sector.  Overall most implementations are private cloud with some hybrid cloud scenarios. As you can imagine, financial service organisations are extremely sensitive to having data outside of their location.

They are embracing new technologies and service models that deliver IT faster, cheaper, and smarter, while making their companies more responsive and competitive. Public cloud computing is at the forefront of this dramatic shift in IT. Offering predictable costs, faster provisioning, and infinite scale, more organisations are incorporating these cloud resources into their IT mix. Customers today want to bank or transact whenever and wherever they want. Global financial management is not easy, but because of technology today, we can go almost anywhere in the world and still retrieve information or withdraw money in local currency.

In fact, the financial services sector is quite advanced when it comes to global reach and progress. Contrary to healthcare or government sectors, the fluidity of currency or financial information is quite remarkable across the world today thanks to advances in technology and this sector has yet to hit a breaking point of innovation in technology.

Ultimately, the entire financial industry has become entwined with technology. Monetary infrastructures depend on it to enable global financial services. Data in particular has completely changed the financial experience and will continue to do so as we move into the realm of digital currency.

By Ramanujam Komanduri

The writer is director, Enterprise Business, India & SAARC operations, NetApp Marketing & Services

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