Financial Services in Five: Technology is a Business Innovation Engine

Many of us today take how we bank, transact, or make a purchase for granted. Yet, the reality is that tremendous innovation in technology has shaped the financial services industry in ways that distinguish the sector from many others such as government or healthcare. Imagine if you could not access your bank account on a mobile device or if you could not withdraw money while on a vacation at the beach? NetApp’s Monty Zarrouk shares his perspective on how technology is shaping one of the most important industry sectors around the world today.

Can you give an overview of the market dynamics the financial services sector is experiencing today?

Monty Zarrouk: The financial services marketplace globally is more demanding—and less forgiving—than ever before. Customers are savvier, oversight is tighter and competition is intensifying. For the foreseeable future, the industry will continue to operate with increased regulatory oversight, expectations to improve governance, and pressure to optimize capital and costs.  These factors play out across the financial services industry landscape driving risk and technology investments.

kite_360.pngHow are these market dynamics creating urgency for technology to change how financial services organizations do business today? What are customers trying to do with their IT in this sector?

MZ: No one business or one customer is the same, but there are some similarities if you look at the types of customers in this sector.

  • Financial markets: Investors and traders need simplified, scalable IT solutions to compete on a global scale. IT delivers the high-performance computing, big-data analytics, and performance required to model, analyze, assess risk, and achieve regulatory compliance in real time.
  • Banking: These institutions face new regulations, increased use of mobile applications and social media, more customer-centric banking, and changing business models. IT underlies the risk management, real-time data analytics, and cloud computing solutions that banks need. They have to manage risk, deliver customer-centric services, and develop new products, all while preserving budgets.
  • Insurance: Regulatory environments and customer demands are forcing insurance companies to improve their analytical models to better compute risks and determine profitable cost structures. Data management technologies can give insurance firms a competitive edge. Insurance firms process huge volumes of data, whether it’s looking at natural disaster trends, or creating predictive models for risk.

Can you give some general examples on how IT in Financial Services is enabling real business and consumer impact?

MZ: Similiar to other sectors, momentum is around the growth and impact of analytics, cloud, mobile, and social media.

What’s amazing about the financial services market is that technology has created entirely new business propositions in financial services, such as peer-to-peer financing, crowd funding and one touch payments. Ever heard of Google Wallet? Or the recent launch of Apple Pay? These are great examples of how technology is evolving an industry and enabling consumers better ease of use for every day transactions.

Although many of us don't realize it since these services are offered seamless to consumers, but data analytics can provide better financial services for the institution and for the consumer. In the past we waited for a detailed loan report or credit history, now analytics can serve up information in real-time based on buying behaviors. This valuable data plays a role in analyzing risk.

Overall, its technology that has provided customers with convenient ways of making secure transactions. Almost anywhere in the world at almost any time, we can now bank, trade, invest, etc. all from a mobile phone. This is extremely convenient, but also requires a large level of security for an industry that moves at dynamic pace and great distances.

Can you expand on the role of cloud computing to financial services organizations today?

MZ: The financial services industry is rapidly adopting cloud computing. By evolving existing IT infrastructures to include cloud capabilities, financial institutions can achieve significant operational and cost benefits in the delivery of their services. Demands for faster access to information, greater transparency, and improved risk management are driving change and transition. Banks are competing with services like PayPal today and are using the cloud to cut costs. In addition, insurance firms use cloud to increase revenue, the adoption of SaaS for example is strongest in the insurance sector.  Overall most implementations are private cloud with some hybrid cloud scenarios. As you can imagine, financial services organizations are very sensitive to having data outside of their location.

What can financial services customers do today that they could not do before as a result of innovation with IT?

MZ: One of the key changes technology has enabled for this sector is improving customer engagement and customer service. Financial services organizations have to consistently rejuvenate how they attract and maintain customers. Customers today want to bank or transact when and wherever they want. Global financial management is not easy, but because of technology today, we can go almost anywhere in the world and still retrieve information or withdraw money in local currency.

In fact, the financial services sector is quite advanced when it comes to global reach and progress. Contrary to healthcare or government sectors, the fluidity of currency or financial information is quite remarkable across the world today thanks to advances in technology and this sector has yet to hit a breaking point of innovation in technology.

A great real-world example of this is ING Direct. Often referred to as “the world’s leading direct savings bank” and owned by the global ING Group, ING Direct accelerated time to market for new products and services by implementing a fully integrated testing and development architecture, including hardware, software, and professional services. ING Direct built private cloud solutions built on NetApp and Microsoft. The company reduced environment provisioning from 12 weeks to 10 minutes, improving developer productivity and business agility. Through a “bank in a box” private cloud solution, ING Direct is able to provision complete environments, accelerating time to market for new ideas.