Guy Warren, CEO of ITRS Group
As we begin 2023, businesses and firms should be considering ways to preserve and set their IT systems up for success. With technology continuing to develop at a fast pace, preserving IT systems must remain a top priority for those in the banking sector.
In March 2022, the Financial Conduct Authority’s (FCA) new guidelines designed to strengthen the operational resilience of the UK’s financial sector came into force. These regulations showcase the importance of operational resilience and observability, giving the financial sector the ability to adapt and recover from disruption.
To support the banking sector on its journey to overcome challenges in the coming year, we’ve put together five top tips to help overcome these barriers.
- Renovate legacy systems
For a long time, it was assumed that renovating software with cyber security in mind, would be too expensive and therefore burdensome to develop. However, third-party vendors are now enabling firms to get their IT estates up to scratch quickly, consistently, and affordably, allowing them to forgo a complete revamp or overhaul. These types of vendors may be the key to allowing struggling firms – particularly smaller ones – to avoid legacy rot and move into the next era of digital transformation with minimum cost and maximum efficiency.
Firms must remember that as they inevitably move forward with digital transformation that new technologies are constantly being layered on top of legacy systems. Instead, companies must work to update or replace the dated components as outdated IT systems can do more damage than good. More often than that, they lead to estates becoming increasingly complex and make the observability of the transaction flow nearly impossible.
- Get to know your system
As businesses are now required to declare the level of uptime they are prepared to commit and stick to, they must ensure they keep on top of a data led approach.
Banks that are struggling to comply with regulations can look to Google’s popularisation of the Site Reliability Engineering (SRE), performance delivery. The SRE is considered the gold standard of uptime monitoring for internet giants and firms interested in digital transformation ambitions.
The SRE approach involves tracking data and trends over a long lifespan to identify and quickly fix degrading performance levels and uses both Service Level Objectives (SLOs) and Service Level Indicators (SLIs) as a two-phase early warning system to ensure they are never close breaching their SLAs.
While Google has the benefit of massive resources and an incredibly experienced team dedicated to the monitoring of this data, third party providers can support smaller businesses with remote specialists and purpose-built software.
- Optimise Cloud capacity
Usage of the cloud has surged over the past few years and as a result, organisations have spent enormous amounts on cloud solutions. However, 35% is currently going to waste, equating to approximately $80 billion of total global cloud spend going down the drain each year.
This is largely due to the challenges of accurately predicting cloud costs and demands. Moving to the cloud requires extensive planning if it is to be done effectively. It is not a simple “lift and shift” transition where the cloud estate is mapped out as a virtual equivalent to the physical estate.
A crucial first step is to take a thorough inventory of the demand of the business’ workload. Businesses must start by downsizing their estate and using in-depth analytics to gain a thorough understanding of workload behaviour.
Firms can ensure accuracy, once they gather all this information, allowing them to optimise their environment for the right workload configuration and spend accordingly. This means more accurate sizes and, in the majority of cases, decreased financial input.
- Know your limits
Pre-testing is crucial to determine what the production environment can handle in order to know for sure that it will function properly at peak demand. Businesses must pinpoint not just the overall system capacity limit but also any specific bottlenecks and performance-impacting pinch points.
Let’s say you’ve had a problem with cloud migration and some of your clients are having IT challenges as a result. As soon as your other customers hear of this and rush to check their own applications, the issue is exacerbated by more users putting additional pressure on the application.
In order for banks and firms to maintain operational resilience measures and avoid further cyber security costs, they must ensure they are constantly using effective monitoring tools.
Businesses can suppress the white noise and focus on what’s important in real-time by implementing a proactive monitoring system that includes physical, cloud, and third-party estates. This will help them anticipate and mitigate IT failures before they happen and save costs ahead of the current unstable economic climate.
- Integrate Zero Trust
In 2022, 39% of UK businesses identified cyber-attacks – among them, around a quarter experienced a cyber-attack at least once a week.
Firms must start integrating security into their operational mindset from now, as opposed to traditional ideas that treat security as separate to operations. As the number of people working from home has increased, businesses must take greater measures against cyber security threats and organise proper training for those working in production on the critical importance of cybersecurity.
The best new practice involves a Zero Trust approach, which puts pressure on businesses to show proof of every transaction, even inside their own data centre. The benefits are evident. If you view every piece of software with the assumption that it’s untrustworthy and you oblige users to prove they’re authorised to access it every single time, the risk of hacking becomes almost negligible.
With the FCA’s regulations firmly in place, it’s essential that banks continue implementing new strategies and procedures with these requirements in mind as the landscape continues to evolve over the coming years. The last nine months have gone quickly, and it won’t be long before the implementation window is closed and the FCA begins handing out fines for non-compliance.
The bottom line is this: if you say you can’t afford to prioritise the operational resilience of your systems, you risk being labelled a laggard.
How FS organisations can utilise data to boost customer experience
Charles Southwood, Regional VP and GM – Northern Europe and Africa at Denodo
We’ve all heard the age-old adage “the customer is always right”. It insinuates that, in any sector, the needs and desires of those buying a brand’s product or services should be paramount. However, today’s customer has new standards and it is becoming harder than ever for businesses to meet and exceed them.
This is certainly the case in the financial services (FS) sector where getting customer experience right used to be relatively simple. The human touch was traditionally delivered as a bi-product of in-store, transactional interactions. Perhaps, as a result of this, few people ever considered changing their provider and the traditional, established banks ruled the space.
However, with the dawn of online banking and the introduction of new, exciting challenger banks as well as the UK’s unique Current Account Switching Service, the balance of power between the consumer and the bank is changing. Consumers no longer feel locked in. If their needs aren’t being met, they aren’t afraid to look elsewhere and switch their allegiance to other companies. In other words, loyalty is far from guaranteed and customer acquisition is only half the battle.
Retention relies upon delivering strong, unique customer experiences that beat down the competition. In order to achieve this, FS organisations will need to be able to leverage data. Its insights could be the differentiator that enables them to stand out. The positive news is that, in our online world, there is a constant stream of data being produced. However, having access to all this data doesn’t necessarily mean that a brand knows how to effectively analyse and utilise it.
Ensuring data provides insight
The rapid growth in digital technologies and services across the sector has left many FS organisations juggling an unimaginable amount of data. This data is both complex and much of it is lacking in quality. Structured, semi-structured and unstructured, it is stored in many different places – whether that’s in data lakes, on premise or in multi-cloud environments. Before FS organisations can even think about using it to inform customer experience strategies, they need to be able to find it and understand it.
This is where modern technologies – such as data virtualization – can help. Through a single, logical view data virtualization boosts visibility and real-time availability of all data across an organisation. Unlike traditional extract, transform and load (ETL) solutions, it does not move and copy data. Instead it leaves it in the source systems. In other words, instead of just replicating data, data virtualization reveals an integrated view to those trying to find it.
For FS organisations this provides several important benefits. For example, it helps when data sovereignty issues arise and the movement and replication of data outside certain countries is illegal. Data virtualization solutions can also assist in terms of financial reporting by fetching data in real time from underlying source systems – applying the necessary security and obfuscation whilst delivering the performance, the agility and the accuracy needed through the seamless connection of data.
FS organisations that adopt data virtualization, are likely to see an improvement in the overall performance and efficiencies of their business operations. Overheads will be reduced, as will the length of project times. Above all, data virtualization will rapidly strengthen the customer experience by supporting business leaders to think strategically and make decisions based on real-time insights. But don’t just take my word for it.
The proof is in the pudding: How Landsbankinn is delivering on the CX promise
Landsbankinn is just one of the many financial services institutions that has already successfully embraced data virtualization and its benefits. Despite being the largest financial institution in Iceland – with around 40% of the retail and 33% of the corporate banking market share – Landsbankinn used to face several issues when it came to data sharing and analytics.
Over 45 siloed data sources – including Oracle databases, data warehouses and APIs from internal and external sources – made finding and accessing the right data at the right time extremely difficult. Without real-time data to fuel informed decision making, customer experience and operational efficiency were suffering. As a result, Landsbankinn was in need of a data overhaul to streamline and integrate its infrastructure.
To bring together its complex data landscape and collect data in real-time, Landsbankinn implemented the Denodo Platform – a data integration and data management solution built on data virtualization – to build a logical data warehouse. As a result, the team can now aggregate data from multiple data sources, transform that data based on the applied business rules, and then make it available to consuming applications. Ultimately, this means that, throughout the organisation, the data can be utilised by a wealth of employees, even those who are not particularly IT savvy. It also means that the business leaders can use data insights to make well-versed decisions and provide a plethora of services to Landsbankinn customers both quickly and efficiently.
In recent years, customer retention has become the key to successfully growing a business. This cannot happen without an effective customer experience strategy. The ability to convert data into insight is priceless in an economic landscape where the line between a business thriving, surviving and failing is so thin. Those operating in financial services must harness modern technologies – like data virtualization – to stay at the top of their game and ahead of the competition.
The Evolution of SoftPoS in 2023
By Brad Hyett, CEO of phos
Contactless payments and digital wallets have surged in popularity in recent years. Part of this stems from the digital boom that occurred during COVID-19 but it’s also thanks to the ease of use that contactless offers customers. This has helped accelerate Software Point of Sale or ‘SoftPoS’ adoption amongst SMEs and enterprise retailers, with a total of 6 million merchants taking advantage of the technology in 2022 according to Juniper Research.
SoftPoS or ‘Tap to Pay’ technology – is a software solution that allows vendors to turn their phones or mobile devices into contactless payment points. This has made life for small businesses easier, as they no longer have to fork out large sums of money for traditional Point of Sale (POS) terminals, i.e. card readers, or ‘make do’ with outdated payment software.
In light of Apple’s announcement to allow third-party SoftPoS providers to deploy their technology on iPhone last year, adoption is expected to increase further. By 2027, it’s forecast that there will be up to 34.5 million merchants by 2027 – nearly a 500% increase from today. With more payment giants like Paypal and Venmo announcing they will support contactless transactions through their iOS apps in the months ahead, what else is in store for SoftPoS in 2023?
Apple’s role in market consolidation within SoftPoS
Apple’s move to integrate the technology with iOS devices will expand SoftPoS’ usability across mobile operating systems – significantly boosting the size of the addressable market for vendors. For the first time, Apple users will be able to offer Tap-to-Pay solutions which have traditionally been limited to Android devices only.
This will ultimately bring greater awareness and adoption of SoftPoS as we see increased familiarity with Tap-to-Pay solutions among businesses and consumers alike – as they’re no longer bound by the constraints of the type of phone they use.
While the SoftPoS on iPhone rollout currently only applies to the US market, it’s fair to assume this will expand internationally at some point – aiding the normalisation of ‘Tap to Pay’ solutions en masse in the months and years ahead.
The next wave of solopreneurs
The events of the last year will also continue to have a ripple effect over the next 12 months. For example, we’ve seen the tech industry undergo mass layoffs due to a challenging economic environment and rising global inflation.
With large numbers of highly skilled talent out of work, the phenomenon of solo entrepreneurship is likely to see an uplift – as it did during the pandemic – over the next 12 months. Born in a digital-native environment, individuals from this released workforce can now set up their own businesses and run them on mobile devices, as opposed to legacy infrastructures.
This could prove another sizable opportunity for SoftPoS vendors in the coming year, as we predict to see more small businesses sprout as a result of ongoing redundancies.
The growing importance of SoftPoS orchestration
As the market rapidly develops, so too does the choice and ease of onboarding. Financial institutions and retail technology providers can now use a SoftPoS orchestrator to help them deploy Tap-to-Pay solutions quickly and easily for their merchant customers, instead of having to create their own mobile solutions. This saves them time and money – both crucial resources for any business and especially in a challenging economy.
Partnering with a SoftPoS orchestrator is a cost-effective way of providing mobile payment solutions without having to worry about waiting on new software and security updates. With an orchestrator, this is done automatically – making this a much lighter lift with no requirement for technological know-how.
As SoftPos orchestrators are acquirer agnostic, this means they can help businesses provide a SoftPos solution to their own retail customers, regardless of the existing acquirer that they’re already using.
An additional benefit here is that a wider pool of merchants are able to benefit from the technology – growing the overall size of the SoftPoS market. Orchestrators, then, have the ability to drive wider adoption of the technology globally, reaching a bigger audience of end users and advancing the mobile payments industry in emerging markets across the world.
The increased popularity of digital and contactless payment options has driven exponential growth in the SoftPoS market in recent years. The next 12 months will see the technology enter the mainstream, as Apple starts to allow more third-party SoftPoS providers to deploy their solutions on iPhones.
The timing coincides with several emerging opportunities for the technology, including a potential uptick in the number of solopreneurs and mobile-first businesses. This combination of factors will see more financial institutions and legacy technology players work with SoftPoS orchestrators to bring Tap-to-Pay solutions to market in 2023 if they want to stay ahead of the competition and keep up with ever evolving customer demands.
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