Financial Services has always been seen as a complex player when it comes to IT transformation. In some respects, the industry can be viewed as a forerunner with new products and services and online access for consumers delivered at pace. In other respects, the industry could also be accused of being stuck in the past, with legacy infrastructure holding back the pace of innovation. Faced with steep competition, the constant threat of fraud and cyber theft, and a strict compliance and regulatory environment, the financial services sector is continually striving for IT efficiencies and capabilities to meet growing internal and external customer demands.

With this in mind, we recently held a workshop and compiled information from the world’s top financial services organisations in order to provide a new view on where they are currently and, more importantly, where they want to be in the near future in terms of IT transformation. The research found that while the financial services is outpacing other industries in some areas, it’s also lagging behind in others. Three major drivers for IT transformation were also identified: Applications, operating model, and infrastructure.

Applications
As companies continue to explore and develop customer technologies, the need for modernised application development infrastructure is increasing exponentially. However, many financial services organisations seem to be stuck in neutral. Of those surveyed, the vast majority (77%) indicated that less than 25% of their application development infrastructure had been modernised. In addition, more than a third responded that no modernisation had taken place at all, jeopardising their ability to deliver on agile, mobile friendly, and cloud-native environments.

In order for a modernised application development platform to be implemented, an increase in hybrid cloud architecture is also needed. According to our research, the industry does appear to be ready to explore the potential of a hybrid model. The financial services sector was initially slower to adopt traditional hybrid cloud architecture, as early adopters assumed that only private cloud architecture would satisfy the strict data protection regulations, and protection their applications and data required. However, as technology has evolved, financial services organisations are starting to see hybrid architecture as a viable, if not go-to, option. In fact, 75% of participants stated they had goals of evaluating all of their applications and working towards cloud workload placement.

Operating model
Many organisations are now looking to run IT like a customer-focused business. They want to empower users with self-service and enable them to make value-based consumption decisions. This means packaging IT services for easy consumption by the business, providing financial transparency through unit-based pricing and billing, and developing processes, roles, and skills to successfully manage the supply and demand side of the portfolio. The first step in this process is to determine what the business wants. It’s no surprise then that the top gap in service strategy, was the ability to provide and efficiently manage user and customer requests through a service catalog and self-service portal, with 94% of respondents looking to establish these services for test and development requirements, with the goal of fully implementing them within the next 2 years.

An effective service catalog and self-service portal allows IT to provide rapid, automated fulfillment of requests for internal customers, transparent service levels and professional-grade customer service. The presence of a fully functional service catalog also paves the way to address other areas of concern that were identified through analysis of data from the workshop, such as the ability to track, report and predict capacity issues.

Virtualised Infrastructure
For many financial service companies, virtualisation is the foundation of transformation. It establishes an agile environment which allows organisations to rapidly develop and test new customer offerings. For example, insurance providers which are looking to offer more and more usage-based devices will require an increase in application and network virtualisation in order to keep up with consumer demand.

Of participants, 31% categorised themselves as having achieved at least 80% virtualisation of their compute platform. In addition, 100% of participants in the workshops indicated that they would like their organisation to achieve this level of virtualisation within the next 2 years.

While compute virtualisation is mature, many financial services organisations could still find efficiencies and cost savings by virtualising other areas of IT. Despite this, goals for network, desktop and application virtualisation remain relatively modest. Almost half of the respondents cited goals of increasing application and desktop virtualisation to 60% over the next 2 years.

Our research has shown that for financial services organisations, there is no single path to IT transformation. While industry experts believe that overall budges for IT spending will only increase slightly over the next few years, there is likely to be a continued shift in how those budgets are spent. Doing “more with less” won’t mean doing the same things with less budget. Driving change through modernising infrastructure, operating models and IT service strategies can enable companies to be more efficient by reducing time spent managing the issues and more time meeting the needs of the business.