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How observability gives digital-first banks the visibility they need



Greg Ouillon, CTO of EMEA at New Relic


PSD2 and Open Banking have made the financial services sector more competitive than ever before. To compete with the hundreds of fintech start-ups that have cropped up in recent years, traditional banks are accelerating their migration towards digital native and digital-first models.

Their aim is to create fluid, reliable, and efficient customer experiences at all times, but as they do so their tech stacks are becoming increasingly complex. To ensure development and innovation proceed at the required speed with a customer-centric focus, banks must employ comprehensive observability to provide real-time visibility into their infrastructure and software architecture.


Increased regulations and the competition they bring

European retail banks are facing staunch competition from fintech start-ups made possible by the implementation of PSD2 and Open Banking. This, of course, was the aim of the new regulations, to foster competition in the financial markets, but they have meant a change of operations for banks. Where before banks were particularly guarded about the information they held on their customers’ bank accounts, they are now required to share it through standardised APIs. Not only this, but they are also responsible for the availability and performance of their APIs and can be fined for repeated faults.

Driven by these European directives and the advantages they provide consumers, neo-banks, competitors of traditional banks, have become a part of people’s daily lives. For example, paying for items, both in person and online, with data securely stored on phones, has quickly become the norm for many people. And now, disruptor banks like Monzo, Revolut, and Starling are gradually taking market share from traditional banks.


Modernising systems to attract and retain customers

In this new, competitive era of banking, consumers have far more choice as to which financial service provider they use. As a result, traditional banks are adopting the intuitive and reliable payment experiences consumers have come to expect from neo-banks. This has extended beyond just payments and checking balances, now bank loans, trading and financial advice, and insurance are expected to all be available through slick, digital offerings.

However, despite consumers no longer hesitating to shop for better deals for their financial services, and s, and disruptors having a head start building their Systems of Engagement (SoE) – the infrastructure that allows customers to interact with their services and perform transactions from their mobile or browser – from the ground up with customer needs and experiences in mind, traditional banks do have a slight edge. They are in possession of the regulated banking licences and can offer a rich all-in-one services portfolio as well as their network of branches through which they can more easily propose a multi-channel service tailored to each customer.

Many digital-first disruptors have focused on modernising SoE. Yet, they are usually backed by traditional banks that own the licences, systems of record (SoR), and the core banking they require. It is in these core banking systems that security, compliance and governance are even more critical and constraining.

To maintain their competitive edge, retail banks can therefore modernise not only their SoE, but also their SoR and core banking architectures to preserve and increase their market share. However, legacy core banking architectures are not very scalable, and, when coupled with their complexity, are serious barriers to innovation and simplification of the customer offering. And since simplicity is at the heart of what consumers want, these can prove to be serious problems.

The obvious answer and strategic impetus is to use SaaS or Cloud Native services to upgrade their systems, but these present complexity and risk challenges such as controlling service reliability and performance throughout these migrations. Regardless, banks must find a way to modernise to remain relevant.


Putting the customer first

Creating customer-centric services is vital for traditional banks as they try to build and maintain trust and loyalty with consumers. And what consumers want is 24/7 availability with zero downtime, whether they’re using mobile, computer, or tablet. Easy and reliable connection is expected for all day-to-day operations, but as mentioned above, this is for all services, including selecting providers, quickly opening accounts, or even starting a procedure online that they intend to complete in person in branches.

Migration to the cloud or creating ‘digital native’ subsidiaries is now recognised as the quickest way for traditional banks to modernise their systems while they work on their core systems. These subsidiaries often have organisational and operational independence, and allow their parent banks to offer agile, innovative services. This approach allows them to go to market quickly with  agile and innovative services, which will find their full potential when the Core systems are also modernised.


Using observability to ensure trust and reliability

Being in the Cloud is a good first step, but there are many more to go. As tech stacks become increasingly complex to match accelerated innovation and development cycle times, maintaining control over reliability, quality, and performance is essential. Banks must be able to measure their systems and software in real time across their entire stack, creating a full picture of everything from SoE, to SoR and core banking. Beyond that, they must have full visibility over their interactions with third-party systems, regardless of whether they control them or not.

To enable this modernization at speed and scale, retail banks must embrace observability as a key part of their infrastructure.

Already, SaaS observability service providers provide their platforms and expertise to global leaders in all industries, who are demonstrating the competitive advantage observability provides. Partnering with  these observability platforms will give banks the best chance of succeeding as they edge towards becoming digital first.  To be agile, to anticipate, detect and proactively resolve availability, reliability and performance issues, they must be able to visualise their performance in real time across the entire application stack.

To retain and grow their customer base, compete with neo-banks, and invent a  new wave of financial services, retail banks must deliver superior customer experience and innovate faster. They must do so while managing a  complex modernization at scale. Investing in observability  will improve not only their customer experience but also their business performance. It will also generate  economies of scale and productivity to free up valuable resources to innovate faster.


Wealth Managers and the Future of Trust: Insights from CFA Institute’s 2022 Investor Trust Study



Author: Rhodri Preece, CFA, Senior Head of Research, CFA Institute


Corporate responsibility is more important than ever. Today, many investors expect more than just profit from their financial decisions; they want easy access to financial products and to be able to express personal values through their investments. Crucial to meeting these new investor expectations is trust in the financial services providers that enable investors to build wealth and realise personal goals. Trust is the bedrock of client relationships and investor confidence.

The 2022 CFA Institute Investor Trust Study – the fifth in a biennial series – found that trust levels in financial services among retail and institutional investors have reached an all-time high. Reflecting the views of 3,588 retail investors and 976 institutional investors across 15 markets globally, the report is a barometer of sentiment and an encouraging indicator of the trust gains in financial services.

Wealth managers may want to know how this trust can be cultivated, and how they can enhance it within their own organisations. I outline three key trends that will shape the future of client trust.



ESG metrics have risen to prominence in recent years, as investors increasingly look at environmental, social and governance factors when assessing risks and opportunities. These metrics have an impact on investor confidence and their propensity to invest; we find that among retail investors, 31% expect ESG investing to result in higher risk-adjusted returns, while 44% are primarily motivated to invest in ESG strategies because they want to express personal values or invest in companies that have a positive impact on society or the environment.

The Trust Study shows us that ESG is stimulating confidence more broadly. Of those surveyed, 78% of institutional investors said the growth of ESG strategies had improved their trust in financial services. 100% of this group expressed an interest in ESG investing strategies, as did 77% of retail investors.

There are also different priorities within ESG strategies, and our study found a clear divide between which issues were top of mind for retail investors compared to institutional investors. Retail investors were more focused on investments that tackled climate change and clean energy use, while institutional investors placed a greater focus on data protection and privacy, and sustainable supply chain management.

What is clear is that the rise of ESG investing is building trust and creating opportunities for new products.


Technology has the power to democratise finance. In financial services, technological developments have lowered costs and increased access to markets, thereby levelling the playing field. Allowing easy monitoring of investments, digital platforms and apps are empowering more people than ever to engage in investing. For wealth managers, these digital advancements mean an opportunity for improved connection and communication with investors, a strategy that also enhances trust.

The study shows us that the benefits of technology are being felt, with 50% of retail investors and 87% of institutional investors expressing that increased use of technology increases trust in their financial advisers and asset managers, respectively. Technology is also leading to enhanced transparency, with the majority of retail and institutional investors believing that their adviser or investment firms are very transparent.

It’s worth acknowledging here that a taste for technology-based investing varies across age groups. More than 70% of millennials expressed a preference for technology tools to help navigate their investment strategy over a human advisor. Of the over-65s surveyed, however, just 30% expressed the same choice.



How does an investor’s personal connection to their investments manifest? There are two primary ways. The first is to have an adviser who understands you personally, the second is to have investments that achieve your personal objectives and resonate with what you value.

Among retail investors surveyed for the study, 78% expressed a desire for personalised products or services to help them meet their investing needs. Of these, 68% said they’d pay higher fees for this service.

So, what does personalisation actually look like? The study identifies the top three products of interest among retail investors. They are: direct indexing (investment indexes that are tailored to specific needs); impact funds (those that allow investors to pursue strategies designed to achieve specific real-world outcomes); and personalised research (customised for each investor).

When it comes to this last product, it’s worth noting that choosing advisors with shared values is also becoming more significant. Three-quarters of respondents to the survey said having an adviser that shares one’s values is at least somewhat important to them. Another way a personal connection with clients can be established is through a strong brand, and the proportion of retail investors favouring a brand they can trust over individuals they can count on continues to grow; it reached 55% in the 2022 survey, up from 51% in 2020 and 33% in 2016.



As the pressure on corporations to demonstrate their trustworthiness increases, investors will also look to financial services to bolster trust. Wealth managers that embrace ESG issues and preferences, enhanced technology tools, and personalisation, can demonstrate their value and build durable client relationships over market cycles.

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2022 ESG Investment Trends



Jay Mukhey, Senior Director, ESG at Finastra


Environmental, Social and Governance (ESG) themes have been front and center throughout the pandemic. While the framework has been surging in popularity for several years, COVID-19 served as a period of reflection causing many companies, investors and other individuals to take these factors seriously. It’s something that we can no longer afford to ignore.

Jay Mukhey

We are witnessing drought, adverse weather patterns, hotter climates, and wildfires with more regularity, raising the profile of the climate crisis. Efforts were renewed at COP26 in Glasgow last November to help address the challenge, with the signing of the Glasgow Climate Pact and agreement of the Paris Rulebook. As a result, we are now seeing record net new inflows into ESG investing and impact.


Evaluating ESG criteria

Long gone are the days when ESG issues were at the periphery of a company’s operations. In just a few short years, ESG criteria have become a key metric for investors to evaluate businesses they are considering investing in.

Investor money has poured into funds that consider environmental, social and governance issues. Data from the US SIF Forum for Sustainable and Responsible Investment shows that ESG funds under management have now reached more than $16.6 trillion. It’s not just institutional investors who are embracing ESG, with Bloomberg Intelligence predicting that savers across the world will amass £30.2 trillion in ESG funds by the end of the year.

Due to the multitude of divergent factors that contribute to a company’s success on ESG, it can be tricky to pin down exactly what criteria to measure. Depending on the industry a company operates within, environmental criteria could include everything from energy usage, the disposal of waste and even the treatment of animals.

Social criteria are primarily related to how a company conducts itself in business relationships and with stakeholders. For example, does it treat suppliers fairly? Is the local community considered when the business makes decisions that would impact them? Do they have a statement and policy around modern slavery?

While governance criteria have traditionally been an afterthought, this may be changing. Everything from executive pay to shareholder rights and internal controls are relevant to investors within these criteria.


Tracking ESG for competitive advantage

Many experts within the financial services industry point to the power of ESG as a major competitive advantage, if used correctly. It has been noted that increasingly corporations, from big Fortune 500 companies down to small scale-ups, will communicate on their sustainability metrics to grow their business and to attract talent. However, it’s no longer enough to just pay lip service to ESG issues, with abstract commitments increasingly being seen as insufficient. Companies must now quickly progress to concrete objectives that can be measured and tracked.

A wide range of data providers now offer detailed information and tools that can measure ESG performance and effectiveness. Yet major challenges remain around bringing together what is often extremely fragmented data and transforming it into actionable insights.


Focus areas for 2022

The ESG criteria that investors measure is by no means stagnant. Complex societal challenges regularly emerge that require the attention of companies. Contributors recognize several topics that demand a sophisticated approach, including the COVID pandemic, diversity challenges and powerful social movements.

Companies operating within the financial services sector face several specific challenges related to ESG, with contributors believing that fintech will also continue to play a central role in finding answers to them.
For example, industry experts expect customers to be more demanding of firms in SME lending when it comes to understanding exactly what impact they are having on the climate. For many financial services firms, 2022 will be the year that they will try to reduce the time it takes to bring ESG products and services to market, such as green loans and mortgages, as well as checking accounts with sustainability and carbon tracking capabilities.

When selecting a service provider, customers are increasingly interested in the ESG credentials of their bank or financial institution. Research from PwC finds that 80% of consumers are more likely to buy from a company that stands up for environmental and governance issues. Consumers are one of the main drivers of ESG and many are putting their money where their mouth is. It’s a trend that’s not going away; financial institutions need to start implementing their strategy for ESG now.

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