Assuring the future of financial services

Cryptocurrencies, frictionless trading, consolidated marketplace lending and agile challengers are all snapping at the heels of the financial services industry. Traditional banks have no choice but to modernize and improve their systems to embrace new technologies and business models that will bring new opportunities but also significant challenges.

abstract FinTech image showing a globe, binary code and various transactional symbols
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The financial services industry is experiencing a period of dramatic change as a result of the growth in digitalization and its effect on customer behavior. In an emerging landscape made up of cryptocurrencies, frictionless trading, and consolidated marketplace lending, traditional banks have found themselves shaken by the introduction of new, disruptive, digitally-native and mobile-first brands.

With a reputation as being somewhat conservative and slow to innovate, many financial service providers are now modernizing and improving their systems, transforming their new business models and technologies in an effort to stay ahead of the more agile challengers snapping at their heels.

However, while this digital transformation brings significant opportunities, implementing these new technologies also presents challenges.

Changing landscape

From bitcoin to compliance with government mandates, the financial services industry faces a range of digital disruption challenges.

The much-discussed blockchain, for example, is currently being explored by at least 40 top financial organizations. Such is its popularity, that one in five IoT deployments are expected to utilize distributed ledger technology by 2020.

But with so much change afoot, financial institutions must consider the question of how they can use these new technology platforms for the benefit of their business, while ensuring that their IT infrastructure is aligned to meet the demands of customers.

Essentially, if they are to remain competitive – and relevant – financial institutions should look to seamlessly integrate all available channels and touchpoints, from web and mobile, to phone and in-person service. Failure to do so could lead to customers going elsewhere, putting revenues at stake. After all, the almost ubiquitous penetration and acceptance of web-based services and mobile devices has set expectations among consumers for rapid innovation and the delivery of personalized financial services offerings. E-trading platform Robinhood, for example, doubled its user accounts to 4 million in the space of a year, and announced plans to become a “full-service consumer finance company,” highlighting both the surging momentum surrounding born-in-the cloud fintech companies and the threats facing legacy financial services firms.

To optimize the customer experience, improve efficiencies and keep pace with consumer demands, many financial services providers are embracing emerging technologies such as robo-advice, which is rapidly gaining traction across a range of demographics beyond just tech-savvy millennials. However, with 64% of individuals born between 1983-2000 saying they prefer hybrid investment advice over either a dedicated human adviser or conventional robo-advisory services, it’s clear that technological innovations should support, and not replace, human capabilities. Robo-advice, for example, must co-exist with a wide range of skilled professionals, including fund managers, bankers and stockbrokers as part of a digital and human financial advisory model.

But while this may be welcome news for financial advisors, it adds further dimensions to already complex IT infrastructure and processes, presenting challenges for IT departments. As increasing number of financial services are delivered through applications that are consumed by subscribers anywhere, anytime, and through a large variety of devices, DevSecOps teams will find it increasingly problematic to assure a delightful user experience. To accomplish this, they need to establish a clear, direct line-of-sight on application behavior and service dependencies and must have the ability to pinpoint the root cause of failures.  Not only is it difficult to accomplish in real-time, but it becomes challenging to collect the critical data needed to accurately understand user experience or assess the need to redesign (re-factor) and optimize applications.

Monitoring for assurance

This challenge is further compounded by the fact that financial service providers must be confident that any digital transformation, such as migrating application workloads to cloud platforms, can be carried out without disruption. As DevSecOps teams seek to automate tasks and accelerate continuous delivery and deployment pipelines, they recognize the increasing complexity in the production environment and the need for real-time system-level feedback to assure application performance and service delivery. They know that downtime is expensive, and continuous monitoring can improve their understanding of the complexities and performance of applications both in the cloud and the data center. Armed with this information, DevSecOps can optimize application security and performance (refactored, lift/shift, or cloud native), and assure a consistent and outstanding customer experience.

Continuous monitoring is invaluable, particularly in relation to the delivery of new services or applications. Incisive and all-encompassing, it must cover every aspect of delivery, integration, deployment, and operation in production environment.  Doing it right means embracing monitoring from the early project planning stages and using it from software development to integration, validation, and service delivery in the production environment. From here, cruising through complex and changing hybrid cloud and multi-cloud environments requires continuous monitoring and powerful visibility anywhere along the service delivery path.

As any IT professional will testify to, it is impossible to fix what can’t be seen. Indeed, reducing downtime risk and controlling business outcomes is contingent upon benchmarking services and applications against KPIs such as responsiveness, reliability and availability, each aligned not only with the needs of the financial services provider, but also with its customers. DevSecOps teams must have insight into individual domains such as applications, networks, servers, databases, and visualize the dependencies between these domains for both traditional n-tier as well as microservice software architectures. 

Visibility to enhance security

By providing faster, more agile, and more personalized services, the mass digitalization of the financial services industry has fundamentally changed the relationship between providers and their customers. With millions of transactions taking place every day, the IT organization needs to simplify complex processes as much as they can and support multiple, diverse stakeholders with data flexibility to meet specific business requirements.

Security is also of prime concern for most financial service providers, particularly since the industry is regularly reported as being the most frequently targeted by cyber-criminals seeking to disrupt operations or access customer account details for financial gain. Seven of the UK’s biggest banks were forced to shut down or suspend operations following a coordinated DDoS attack in 2017, for example.

While standard security measures such as firewalls and intrusion detection systems do play a part in mitigating against such attacks, the majority of DDoS attacks will systematically target these systems before overwhelming the network and causing an outage. For assurance that their networks, and thereby the sensitive information that flows through them, are safe and secure, financial institutions must first know their IT infrastructure inside and out and understand the risks they face from external threats such as DDoS attacks. Only then will they be in a position to implement the appropriate security measures to protect their networks and data.

Getting smart with data

In addition to gaining full visibility into the entire IT infrastructure, it is critical that financial services providers leverage smart data. Capable of revolutionizing how applications are monitored and analyzed in virtualized, physical, on-premises and cloud environments, smart data distills the essence of the IP traffic flows, a.k.a. wire data, and prepares and organizes it at the collection point. As such, it is ready and optimized for analytics at the highest quality and speed and allows providers of digital services to simultaneously monitor and secure their services and optimize their users’ actual experience. By turning wire data into smart data, DevSecOps teams get access to a single source of truth that can not only scale to any size IT infrastructure but also provide a common situational awareness.  When smart data happens, financial services institutions can get deeper insights into performance and faster mean time to knowledge, which enables them to quickly identify any issues or threats that arise, ultimately reducing business risk, and improving productivity.  

In an increasingly competitive and highly regulatory landscape, established financial institutions must ensure that the services they offer are seamless, secure, compliant and personalized across all possible service channels. To assure this network availability requires a combination of pervasive, end-to-end visibility, smart data, and superior analytics. Only by doing so can they truly embrace the potential of finance’s future.

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