This month’s transactions and processes news round-up is revolving around technological investments, the future of the financial services, and the call for banking innovation.
Investing in technology
Mike Magee, writing for Tech Eye, highlights a recent report on financial services spending a bundle on new technology. Mike quotes a report by market research firm IDC, revealing that financial services giants spent around $114 billion on big data, analytics, cloud computing, and mobility in 2015. IDC describes this market as the ‘third platform’ and says the four pillars of this temple are mobility, cloud, big data and analytics, and social business. Mike quotes Karen Massey, Senior Research Analyst at IDC, who says these four elements have ‘caused a fundamental shift in how financial services are consuming and budgeting for IT and applications.’ Mike explains that big data and analytics are important to financial services companies, as it helps to optimise business, improve compliance, and engage customers by using data driven decision making.
Financial security in the cloud
David Strom writes a piece for Security Intelligence on the major misconceptions about cloud security in the European financial sector. Quoting a report by the ENISA titled ‘Secure Use of Cloud Computing in the Finance Sector’, David highlights how European banks and other financial institutions lag behind with respect to perceptions and usage of cloud computing in their businesses. While 87 percent of those institutions are already using some form of cloud computing, their knowledge of the cloud and the best practices are still lacking. David relays a series of recommendations for financial institutions around the globe, provided by the report. To begin with, everyone should adopt a similar set of minimum cloud security and privacy requirements. Regulatory bodies should define best practices and de facto cloud security standards to help facilitate better incident information sharing and increase the trustworthiness of cloud computing. Finally, David outlines how organisations should adopt a risk-based approach when moving to the cloud, and their cloud security strategy should be aligned with their own corporate risk assessments.
Time for innovation
Haseeb Awan’s article for Tech Crunch provides three ways to stay current in the financial services industry. Haseeb believes that the financial services industry is a cutthroat market with razor-thin margins, yet the potential to innovate within this sector has never been higher. Because of wide-scale technology adoption, mobility, and digital money, banking and financial institutions are facing an imminent threat from fintech startups for products such as loans, money transfers, and stock trading. Haseeb states that banks must now innovate. He claims that banks are not as slow as they are perceived to be, and they have the resources to acquire the best talent, infrastructure and whatever it takes to get the job done. Fortunately the banking sector has an extremely low churn rate when it comes to core products - deposits and lending. Haseeb concludes that banks have the leverage of a huge customer base, experience, licenses, and deep pockets. If they fail to innovate faster, they could be looking to acquire winners in the niche product markets. In this case, financial companies retain the monopoly.
Concluding this month’s round-up is Matthew Finnegan, writing for Computer World UK, on how technology will transform banking in 2016. Matthew reveals that during 2015, the big UK banks continued to invest in modernising their infrastructure as well as focusing on delivering services through digital channels. Matthew now makes some predictions for the banks in 2016, including how the finance sector will reap the benefits of the internet of things. Financial services may not be the first sector that springs to mind when discussing the internet of things, admits Matthew, but as a Deloitte report points out, the explosion of internet connected devices will provide better data for decision making. Mike Laven, CEO of Currency World, believes this will provide opportunity for new players in the market: “When IOT crosses with finance, we suddenly get an explosion of data. It starts to get interesting when it comes to figuring out how to use that to great effect - and more specifically how to monetise the use of that data is something fintech entrepreneurs will be looking to figure out in the new year.