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From compliance to innovation: the acceleration of DX in FS

The COVID-19 pandemic has helped to drive focus for financial institutions onto systems resilience and operations. Once cast in a role of planning for different worst case scenarios, CIOs have been tasked to help banks continue to service customers in the new ‘stay-at-home’ era, focusing on delivering self-service systems, modernising and enabling more access to mobile apps. This has accelerated an existing trend. The case for delivering a more streamlined and multi-channel service has increased in line with branch closures and remote working, while the adoption of Open Banking has opened up the ability for third parties to take advantage of bank’s APIs, encouraging innovation, and, simultaneously, spurring competition.

The key to staying ahead of the game is digital transformation. Yet, while it has been at the top of the agenda for every financial institution’s CIO over the past decade, in reality legacy systems and a focus on compliance over technology benefits has slowed progress. A recent global survey of banks found that only 21% of the respondents cited “deploying advanced technology” as a priority, with “operational excellence” (20% mention) and “culture development” (8% mention) rounding out the bottom three priorities, according to the Digital Banking Report 2020. The COVID-19 pandemic has served to expose just how much banks need to achieve in order to modernise systems and offer that optimal customer experience. Speed, agility and adaptability has never been more important for banks as they navigate uncharted waters.

The cloud motivation

 Many traditional financial institutions are considering moving beyond on-prem, legacy systems, either completely or partially to the public cloud so that they can realise the speed, agility, cost, and efficiency benefits afforded by such a move. For example, last year BNP Paribas signed an agreement with IBM Services to further deploy its cloud strategy. Other players that have publicly announced a pivot to the cloud include Lloyds, Westpac and PecunPay.

While this progress is encouraging, agility has never been the mainstay of financial institutions. Running on legacy systems, often based on millions of lines of COBOL, means finding a strategy to modernise systems can be difficult. Traditionally, rather than moving whole systems to the cloud, banks have tried to modernise systems on-prem using a ‘patchwork’ approach – updating and integrating only parts of systems as necessary due to the complex nature of the existing infrastructure and architecture. A series of spaghetti-like systems make it hard to ‘lift and shift’ or ‘rip and replace.’

A key driver for the on-prem approach has also been a cautious attitude towards data and the need to comply with stringent financial data regulation. Culturally, institutions focused on regulations and security have found it difficult to reconcile the benefits of infrastructural change with the concern that change will let caution slip. Being accountable to regulators and with audits taking place at least once a year, some concern is understandable, if not an imperative.

Yet, trends towards innovation such as Open Banking, AI, containerisation, and blockchain have propelled the need for financial institutions to balance security and compliance with a growth mind-set, with the public cloud as part of that picture. Banks can assuage some of this concern by knowing that the scale of cloud providers’ teams focused solely on protecting data can often outweigh the internal resources set aside to do the same for on-prem data. 

Additionally, banks should make the journey to the cloud in a way that is customised to their specific needs and challenges. Not all journeys will be the same, and, simply migrating workloads to the cloud without adapting, enhancing, and improving them so that they run well within a cloud environment will mean that banks do not realise its true value. This could also hinder user experience and thereby adoption.

Managing a hybrid strategy

Some banks are taking a cautious progression to the cloud which has seen the uptake of a hybrid cloud approach – using the public cloud for cutting edge developments and customer facing initiatives such as AI, so as to ensure speed, scalability, and real time, contextually aware data – all of which can be useful for consumer applications such as customer service support and location based applications.

However, hybrid strategies often create data silos which prevent data connections and the ability for one single data source of truth. This leaves institutions without the complete view of their customer they need to offer joined up services or to use this view in strategic decision making. Additionally, it can be difficult to be able to integrate third-party data into these data streams so that visibility can be seen across partner data – a vital process in the context of Open Banking.

In these scenarios, banks should consider implementing a data fabric strategy. With an architecture and set of data services that provide consistent capabilities across a choice of endpoints spanning on-prem and multiple cloud environments, they will be able to better manage data to accelerate digital transformation and ensure data visibility for access and control, data protection, and security purposes.

Cultural mind-set

When starting on the public cloud journey, teams across engineering, IT, business operations, and compliance should come together to review workflows and processes – but also guide principles, shared objectives, and a roadmap to the cloud. This will play a pivotal role in helping to change the cultural mind-set of the business to go beyond stability, trust, and security, to a more rounded, all-encompassing vision of the agility and adaptability benefits that the cloud can bring. This shift will go beyond agreeing a strategic vision and into action, underpinned by a multidisciplinary, collaborative team with diverse views.

Rather than focus on an inward looking viewpoint, the mind-set shift can also extend to partners and third parties. Incorporating best practices and listening to consultancy from partners who have worked across the industry either from strategic consultants or from third-parties via APIs and cloud platforms. Other third-parties can include fintechs and industry analysts.

A long way to go, but the pace is gathering

Ultimately, banks need to partner with specialists who are able to review their bespoke needs, challenges and security concerns before they decide on a cloud strategy. Each strategy should be individualised and help the bank take into consideration how to go beyond simply ‘lifting and shifting’ workloads to the cloud.  The right architecture, the right data fabric strategy, cross collaboration between multidisciplinary teams, a shift in the cultural mind-set and seeking external consultancy and best practice will smooth the journey to the cloud. The pace is gathering. Innovation, competition, new market dynamics and the changing way in which banks now need to operate, demands it. All require speed, agility, flexibility – the ability to pivot when plans change. The cloud strategy should be underpinned by a respect for compliance, but not driven solely by it.



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Steven Rackham

Steven Rackham

CTO for Financial Services


Member since

04 Jun 2020



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