By Balakrishnan Anantharaman
Over the past year, traditional financial services companies have realized that to provide holistic customer experience of the highest quality, they have needed to accelerate adoption of new, emerging and agile technologies. While resilience, availability and uptime remained key requirements from compliance and regulatory perspective, rapid developments from newer players in financial services has challenged the hegemony of traditional FSI giants. Hence, organizations are making efforts to transform their online, digital customer experiences in the current pandemic, and find the ways and means to retain, engage, and acquire new customers.
A plus for the industry is that the pandemic has dramatically increased the need for its services—especially digital banking and payments, insurance, and customer support services. The challenge is in meeting and exceeding those expectations with real time improvement in areas like transaction processing (volume of transactions per second e.g UPI),while keeping an eye on the cost per transaction
Globally, around a quarter of consumers have abandoned in-person banking, with more than 70 percent banking digitally every week. There is the sense that traditional institutions will need to become more agile and fast-track innovations to survive this shift. This year we can expect to see a rush to capitalize on emerging technologies to automate manual processes, develop more digital products and deliver better services overall.
Central to this new model will be the modernization of IT infrastructure and applications, and a move to hybrid and multi-cloud solutions. Adoption of hybrid cloud is growing across industries but the regulatory and security requirements specific to financial services make it especially helpful in this environment. Traditionally, the private cloud has offered high levels of control and security, while the public cloud offers flexibility and agility. Hybrid cloud models now take care of application mobility and interoperability, providing the required flexibility and agility like public cloud environments.
Regulation and governance are already strict within the FSI sector. By ring-fencing locally required, sensitive and personal data on an on-premise private cloud, while permitting global access to generic and non-sensitive apps and systems, hybrid cloud can fulfill both requirements without restricting the institutions ability to operate efficiently and profitably.
With developments like ‘Open Banking’ coming into the fray, customers are showing themselves to be more willing to share their financial data in exchange for more tailored services, such as a better mortgage or savings rate. To succeed, financial services companies need to be as agile and open minded as their customers in their use of technology, which is set to drive everything from the creation of new business and economic models to personalization and data analysis. Hybrid and multicloud strategies will underpin this adoption.
Our recent Financial Services Enterprise Cloud Index Report shows that most companies are looking at IT more strategically due to the pandemic. As part of this, more than half are investing more in hybrid cloud services. HCI has evolved from Hyper Converged Infrastructure to Hybrid Cloud Infrastructure and large FSI institutions are putting their key workloads on the HCI platform as part of their modernization efforts, thus enabling the unification of private and public clouds.
Around half the respondents said their companies have HCI fully deployed or are in the process of doing so, while another 38 percent expect this to happen within the next one to two years. They see IT automation and modernization as an enabler of speed and security as well as bringing down their overall cost of operations. Their priorities are to gain more control over IT resource usage (59 percent), to gain speed (58 percent) and flexibility (55 percent), and to bring down the overall costs (31 percent). In one example from India, we see how cloud technology is helping leading banks improve efficiencies. The company has seen call-center staff efficiency rise by 35 percent, and reports that its applications and databases run five times faster. Database administration is reportedly 90 percent more efficient, and the technology has helped speed-up the marketing of new services, with tangible customer benefits during the pandemic.
As hybrid cloud gains adoption, application modernization has emerged as a key focus area for FSI organizations. This calls for a simplified control plane and a platform that can span a multi-cloud environment supporting legacy, as well as modern micro-services-based applications. By automating application roll-out process across clouds for infrastructure, databases, applications, security framework customers have experienced as much as 90 percent better efficiency in their business response times and post going live operations.
Whatever turn Covid-19 now takes, the financial services sector’s transformation is well underway. Modernization of IT will also cater to the need for faster innovation as required by today’s customers. As end user applications are re-architected and rewritten in cloud native technologies, there will need to be a balance between BAU ( Business as Usual) processes which bring in the revenue today and newer innovations which will help retain the customer of today and acquire the customer of tomorrow. As such, hybrid and multicloud fits right in the middle of this strategy.
(The author is VP and MD-Sales, India and SAARC, Nutanix and the views expressed in this article are his own)