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How organisations in financial services can achieve multi-cloud data resilience

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W. Curtis Preston, Chief Technical Evangelist, Druva

 

In the past, the financial services sector has been known for their slower pace of digital adoption. More often than not, banks and financial institutions would rely on the same legacy systems for decades and keep data locked away in data centres. Many were simply not interested in the cloud because of misconceptions that it was not secure or that would make it harder to maintain compliance.

However, this is beginning to change as myths around the cloud continue to be debunked. In fact, the cloud makes it easier to secure sensitive data, as you simply have to follow the established best practices of the cloud vendor you are using. Contrast this with the hodge podge of security practices in the typical datacenter, and you will see why those who understand the cloud tend to trust its security more than the typical datacenter.

W Curtis Preston

As more organisations in financial services realise the many benefits the cloud has to offer, cloud adoption is quickly becoming the norm. In fact, Gartner expects that 75 percent of financial institutions’ infrastructure and data will be processed in the cloud this year. Even more, many are turning to multiple cloud providers to reap the benefits of the cloud’s scalability and to achieve cost savings for specific workloads. Research from Bain & Company found that this is especially true with larger enterprises, in particular. The Bain survey shows that the number of public clouds used by large organisations, including financial institutions, is almost 50% higher than for small organisations.

 

The multi-cloud world

What is happening alongside this shift, is that single-cloud deployments are quickly becoming a thing of the past. Organisations are being driven by the need to deploy best-of-breed applications and they are now rapidly moving to multiple cloud environments, or otherwise known as adopting a hybrid approach.

These changes have meant that, unavoidably so, the multi-cloud world is becoming the new reality. Although this is very much the case, the same Bain survey found that many executives in financial services have concerns that multi-cloud environments can become very complex – and there are legitimate reasons for this concern.

 

What are the challenges?

To understand these challenges, it’s important to note that multi-cloud is not something that just happens overnight. Instead, multi-cloud is a gradual evolution that typically is thrust upon teams by developers and business units adopting public cloud and SaaS applications such as Microsoft 365 and Salesforce.

As organisations adopt multiple SaaS applications and rely on multiple, diverse clouds, data becomes more distributed which creates silos. Information is inefficiently replicated across redundant storage types and locations with no central controls or visibility. In addition, as data becomes more  distributed across different locations, it creates more area to attack. Threats such as ransomware remain a serious threat to financial services institutions – so much so that the banking industry alone experienced a whopping 1318 percent increase in attacks in 2021.

 

How these challenges can be simplified

Overcoming these obstacles may seem inconceivable for some, but it is possible. To simplify, organisations need a single solution that is inherently designed for the multi-cloud world – one that can manage data and keep it resilient across multiple environments. Yet, the delivery of such a solution is far from simple, and requires a specific skill set and expertise to get it right.

A solution that is built in the cloud and offers a single control pane is key to regaining control of multiple data sets. A true multi-cloud control pane must follow three key principles. These include:

  • No infrastructure: enables an organisation to scale compute, network and storage resources as needed. An infrastructure-as-a-service approach uses application programming interfaces (APIs) to continuously monitor data assets and proactively address problems in the data infrastructure. The cloud-native solution will give IT administrators and business owners easy access to all the latest technology without requiring additional staff to manage it.
  • Global policies: allows an organisation to follow best practices for data management in a holistic manner across all environments. When policies are global, it ensures that an organisation’s data resilience standards are met across the entire environment, while requiring management of these policies in only one place.
  • Self-service (with central oversight): ensures any organisation can delegate certain responsibilities for maintaining data resiliency to application and data owners, while still providing IT protection administrators with centralised control. The central oversight is necessary to ensure the organisation and its data will always be protected.

Overall, it is critical that all organisations, including those in financial services, have a solution that can work across all clouds and instantly scale with their business. It isn’t possible to effectively retrofit a legacy data protection architecture into multi-cloud environments because these legacy tools were built for an appliance-centric data centre. Organisations should look to adopt an approach that fits correctly with their growing multi-cloud environment – one that enhances data resiliency and provides a better way to manage, protect and secure critical data – wherever it lives.

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How can businesses boost employee experience for finance professionals?

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By Martin Schirmer, President, Enterprise Service Management, IFS

Over the course of the last year, The Great Resignation has seriously impacted organisations across the globe. Staff are quitting in huge numbers, leaving companies unprepared and struggling to fulfil their workloads. In fact, mass departures are happening at all levels of the labour market, as employees attempt to adapt to the hybrid working model and growing socio-economic uncertainty.

In light of this, optimising the employee experience (EX) to attract and retain talent has become a top priority for employers. Organisations have come to understand the necessity of taking immediate steps to drive employee engagement and reshape workplace culture.

The financial services (FS) industry is no exception to this trend. From increasing employee burnout to growing career dissatisfaction, the pandemic has exacerbated the need for transformation across finance teams. This is exemplified by recent data from Spendesk, which found that approximately 40% of finance professionals are willing to leave their roles or already have concrete plans to do so.

Organisations looking to get ahead of the competition must put in extra efforts to retain their existing workforce. The fact is that employee expectations and requirements have irreversibly changed, with more workforces becoming increasingly distributed. Today’s hyper-connected workforce values flexibility and simplicity, and it is organisations which offer these experiences that will succeed in the long term.

As part of this process, finance companies must look towards the power of technology to create seamless user experiences across devices. From automating workflows to improving overall efficiencies, Enterprise Service Management (ESM) can help organisations to boost user satisfaction and go that extra mile for their employees.

How poor EXs are driving finance teams to quit

With over 40% of employees spending a significant proportion of their time carrying out mundane, manual tasks, it is not surprising that poor EXs are having a detrimental impact on job satisfaction. Finance teams in particular have been slower to digitise core processes, leading to a heavy reliance on manual tasks. This not only increases the amount of time spent on each task, but also impacts the engagement levels of finance professionals who cannot focus on more strategic aspects of their roles.

As a result of the pandemic, flexibility has also moved to the forefront of finance teams’ desires. Given the fast-paced nature of this industry, the conversation surrounding work-life balance has increased rapidly. Failure to offer flexible working policies, coupled with a lack of technology to facilitate this flexibility, has led to poor EXs across the board.

Most notably, the overarching move to omnichannel, digital-first approaches has dramatically reset both customer and employee needs. Finance is the third-slowest running corporate function behind legal and IT. Operating in a competitive environment, 73% of finance operations are facing pressures to speed up, improve efficiency, and prioritise automation.

Mitigating the problem using technology

ESM, an offshoot of IT Service management (ITSM), is the cornerstone of smart digital transformation for organisations. It can help finance teams to streamline and automate routine processes, such as monitoring the status of service requests, approving expenses, sending invoices, and tracking payments. In turn, this will free up employees’ time, reducing the burden of manual tasks and enabling them to focus on the more strategic tasks.

Another advantage ESM can offer finance teams is the ability to adapt to each department’s minimum requirements for data privacy. Accounting, for example, needs additional layers of compliance built into the system.

ESM can also facilitate cross-departmental collaboration, helping finance professionals to communicate with the wider business and perform tasks more effectively.  Organisations can use ESM to incorporate all internal services into a single platform, offering employees a well-rounded view of the business and promoting a sense of community across all levels of an organisation. This will boost productivity, whilst enhancing visibility and control.

Ultimately, the current job landscape has brought with it a new set of challenges. Organisations in the FS industry looking to navigate the storm and retain top talent must refocus their efforts on bolstering the EX. Embracing a new era of technological innovation that empowers employees and boosts engagement is a critical step in this process.

 

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CBDCs: the key to transform cross-border payments

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Dr. Ruth Wandhöfer, Board Director at RTGS.global

 

If you work in finance, you’ll have been hearing a lot about central bank digital currencies (CBDCs) and the moves different markets are making towards using, regulating and evaluating the viability of moving to an economy based on digital currency.

We are already seeing progress in the research, piloting and introduction of CBDCs into the financial system. The Banque de France for example, recently launched its second phase of CBDC experiments in line with the “triple digital revolution” unfolding in the financial sector. The infrastructures of financial markets and fintechs, however, are not prepared to accommodate their security, stability, and viability.

This could be an issue in the not too distant future. Each year, global corporates move nearly $23.5 trillion between countries, equivalent to about 25% of global GDP. This requires them to use wholesale cross-border payment processes, which remain suboptimal from a cost, speed, and transparency perspective. In fact, the G20 cross-border payments programme considers improving access to domestic payment systems that settle in central bank money, as one of the key components in facilitating increased speed and reducing the costs of cross-border payments.

The current state of cross-border payments

International transactions based on fiat are currently slow, expensive, and highly risky due to today’s disconnected financial infrastructure, messaging, and liquidity. Wholesale cross-border payment settlement can take 48 hours or longer, which is not practical in today’s digital world. Even if not every market moves to CBDCs, in an increasingly digital era, cross-border settlements between central banks will unavoidably involve dealing with CBDCs. So, not only will we have different currencies, we’ll have different technical forms of currency being exchanged – digital and fiat – as markets adopt CBDCs at different rates, adding another layer of complexity to cross-border settlements.

While there is much anticipation about the opportunities CBDCs can bring, the adoption of this technology will only be widespread if payment and settlement capabilities are overhauled to allow for new innovations in currencies.  This need for transformation represents an opportunity to redesign existing infrastructure to support cross-border CBDC transactions.

The current cross-border payments system involves correspondent banks in different jurisdictions using commercial bank money. Uncommitted credit lines used in cross-border transactions are a potential risk for any bank that relies on credit provided by a foreign correspondent bank. Interestingly, there is no single global payment and settlement system, only a complicated network of interbank relationships operating on mutual trust. While trust has allowed financial systems to function smoothly, when it begins to fail, as it did during the 2008 financial crisis, the result can be catastrophic.

Following the crisis, the Bank for International Settlements (BIS) implemented the Basel III agreement, which required banks to maintain additional capital against correspondent banking account exposures. These risk-weighted assets impose a costly capital charge on positions held by banks at other banks under correspondent arrangements. While this framework helps combat risk, it neglects to address the inherent problems in traditional correspondent banking that contribute to these risks.

Making the case for CBDCs

CBDCs can offer an improvement in settlement risks and are certainly thought to have potential benefits by the BIS. If implemented correctly, wholesale CBDCs can indeed accelerate interbank transactions while eliminating settlement risk. They can also encourage a more efficient and straightforward method of executing cross-border payments by reducing the number of intermediaries.

It is likely the evolution towards CBDCs will initially see the financial market supplement rather than replace existing payment instruments with new types of digital currency. CBDCs will coexist with current forms of money in a wholesale context, and their payment rails will also work alongside the existing payment systems. In simple terms, CBDCs will need to be linked to the broader capital markets ecosystem and applications such as securities settlement, funding, and liquidity.

If built with an innovation-first mindset, the future of banking infrastructure should provide full interoperability and convertibility between fiat, CBDCs, and any other type of digital money used in wholesale payments.

The future of CBDCs

To unlock the full potential of CBDCs, a ‘corridor network’ will need to be formed. This involves combining multiple wholesale CDBCs into a single, interoperable network under common governance agreed upon by all central banks involved. The legal framework of this platform would then allow for payment versus payment (PvP) or, where applicable, delivery versus payment settlement.

Practical wholesale CBDCs appear to be on the horizon, either as a supplement to existing financial systems or as part of a transition to a digital, cashless world. Looking ahead, central banks would benefit from collaborating with fintechs that provide innovative cloud native technology to enable seamless wholesale cross-border payments without interfering with the flow of funds. If wholesale CBDCs are to become a reality, fintechs must be prepared to accommodate them.

 

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