Why Financial Services Shouldn't Shy Away from a Platform Shift

Financial Services (FS) organisations are hugely complex in terms of their business operations; they have retail arms, investment and fund management operations, insurance businesses and more. Many of their systems and operational norms are audited and regulated by bodies such as the Financial Conduct Authority. As such, they tend to have correspondingly complex data infrastructure and IT environments. This is often further complicated through the demergers, mergers and acquisitions common in the sector. And indeed, having to deal with an IT system often comprising a mix of bespoke and legacy applications, some of which may be up to 50 years old, makes this challenge more complicated both for the infrastructure teams and the development/operations (DevOps) teams.

Under continuous pressure to evolve and keep up with fierce competition, from Apple Pay and PayPal, to High Frequency Trading fund managers, to mobile operators taking on banking services and beyond, organisations within the financial services sector need to continuously evolve to meet, and even exceed, customer and employee expectations. These new services, which in many cases will be driven  by corporate data as well as social, mobile, data-rich applications, require a more agile approach to IT. FS organisations need to find a way to escape this ‘spaghetti’ mix of legacy applications and interdependencies and get to a point where applications can be flexibly built, tested and rolled out without a hundred layers of integration checks, system upgrades, resilience assessments, or costly upgrades to fixed infrastructure.

One key route for FS businesses to consider is ‘Platform as a Service’ (PaaS). Platform as a service provides innovation teams in financial services organisations with a base from which to develop and deliver services to customers more quickly, without the need to completely overhaul, upgrade or work around the existing IT infrastructure. Functionally separate from the ‘legacy’, PaaS provides a consistent, unified platform to support the continuous delivery of applications, helping the development and operations team to be more agile in the delivery of new services. This in turn helps those teams escape the 80/20 ratio of maintenance/innovation investment of time and resources, freeing them up to better support the FS business’ innovation objectives.

But whilst on the face of it, the notion of PaaS is clearly appealing, in practice financial sector leaders need to overcome several significant obstacles:

1. People management: automation of a web of systems is complicated. This requires drawing in the IT infrastructure team, application developers and the broader business to work together to understand the business priorities and deliver the right services, both internally and externally. This may mean re-architecting legacy systems as open data services, or in the creation of ‘data lakes’ that can inform next-generation applications built on PaaS. For example; claims information for an insurance business that is normally archived away and made inaccessible, can instead be made available in a “data lake” allowing developers to build analytics applications. These might help mitigate against fraudulent claims, or could help shift the pricing of premiums to make a more compelling proposition for low-risk customers.

1. Regulatory compliance and risk: the most common of hold-ups for most migrations to this platform-oriented world for DevOps and infrastructure teams is compliance, followed by the cultural, skills and operational shifts required within the IT team. DevOps need to be equipped with a strong enough understanding and working relationship with the compliance and risk teams that the release processes for new applications don’t put any data into contexts which are restricted by industry regulation.

1. Chicken before the egg: weighing up the risks inherent in a major transition against the proposed long-term benefits can take a lot of time, and can sometimes stifle innovation. Whilst strategically there’s no reason not to take this approach, tactically there will always be reasons not to. At some stage, to remain competitive, FS businesses will need to take the plunge.

In the new world order, there’ll need to be careful thinking about where the responsibility lies between developers and IT teams. In the future, both teams will need to adapt and establish a new organisational structure to help streamline the management of the PaaS systems needed for future agile innovation.

When the teams are brought together, it will mark a significant shift in how services are developed and rolled out by FS organisations, and enable them to win in a new, vibrant and competitive era for the sector.