Putting Data At the Core of Financial Transformation

By Duncan Ash, Vice President, Global Industries, Confluent


It is clear the financial services industry is at a pivotal point and going through a tremendous amount of transformation. This is largely due to the disruption from the likes of challenger banks, the effects of the pandemic, rise in cybercrime, and ultimately changing customer behaviour and expectations. The fundamental crux, however, for financial services brands is dealing with all of this in an industry which is highly regulated and governed. While this is critical for running robust services, it can slow innovation.

Innovation and technology are at the core of any organisation wanting to successfully reinvent itself during this pivotal period and to ensure their business model can streamline operations, increase efficiency, and ultimately match the expectations customers now have when it comes to the brand experiences they get. In fact, Forrester predicted that tech spending by banks in 2022 is expected to achieve double-digit growth. When evaluating what that spend should focus on, organisations in the financial industry need to ensure they are investing in data management.

The reason behind that is simple. Data is the lifeblood of any organisation and, in recent years, there has been a major shift in the way teams think about how data is processed and managed. Essentially, organisations need to be able to consolidate data from a variety of applications and services to be able to answer questions from the business. What’s more, the data needs to be accurate, complete, and timely. Employees simply can’t make decisions based on old or inaccurate data and in financial firms specifically, the use of data allows employees to offer greater value and personalised services to clients and address business challenges such as fraud. This is why organisations are starting to move away from relying on traditional systems of storing data and looking to support a continuous flow of data from across the business, between apps, databases and cloud providers.

By allowing data to move fluidly in real-time, no matter where it resides in an organisation’s IT infrastructure, true innovation can occur. Here are three financial services use cases to showcase that.

Driving the hyper growth of payments technology 

Payments technology has been embedded into almost all consumer services, from e-commerce to gaming, transportation, television and mobile apps, and because of that, the global payments infrastructure and ecosystem has had to scale up quickly. This hasn’t been an easy journey for everyone especially in light of regulations and an increasingly challenging security environment.

Data is the vital fluid for this ecosystem. Take fintech firms specifically. They are launching new cloud-native platforms and depend on real-time access to data to support their microservices-based applications. In addition, fraud has become a growing problem in payments and is harder to detect than before because of the increasing array of channels, platforms, and networks that present themselves as a wider attack-surface to cyber criminals. Having access to real time data allows fraud to be detected rapidly, and, in many cases, the ability to block a transaction before it can be completed.

Preventing financial crime

The boundaries between cyber security, fraud and financial crime have become blurred. Cyber-attacks on all aspects of financial services are often the first stage in fraud taking place. Frauds no longer just happen in seconds; some of them can last for years. Consider common attacks like phishing or account takeovers. This has driven the need for fusion centres where internal teams work together. However, collaboration is the most important element required to make a fusion centre successful. Firms need executive sponsorship and a willingness to break down the barriers between teams and their data silos. Political fiefdoms must be broken down and teams need to embrace a new, collaborative way of working, often with data and processes that will be new to them.

Delivering a real-time view of risk 

Risk management teams have found themselves firmly in the spotlight since the 2008 financial crisis. Since that time, techniques evolved, new asset classes emerged, and the data used to drive risk calculations became more readily available and higher in volume and complexity.

However, organisations need to understand that asset managers, hedge funds, retail and commercial banks, insurance and reinsurance organisations all have their own data challenges, regulations, risk measures, and reporting requirements – all of which need addressing to enable firms to embrace risk and bake it into their operations.

Ultimately, modern organisations in the financial services industry need to serve customer demands in real time. Teams need to be perfectly informed with a stream of real-time insights that drive the right decisions and experiences. This is what is fundamental to managing the disruption taking place and the key to making that happen is bringing together data from all of the relevant systems and processes to one common platform. This will support financial organisations in driving innovation and successfully transforming their business models.


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