Stephan Fabel, Director of Product at Canonical
Which industry is leading the way in the adoption of emerging technologies and why?
A recent report from 451 Research, commissioned by Canonical, found the financial services industry is looking at emerging technologies at a higher rate than organisations in other sectors.
Established financial services organisations are being pushed to transform by the entry of cloud-native disruptors such as’ Monzo and Revolut which have altered the industry landscape with heightened customer expectations. These digital-only startup banks and payment providers employ services from ‘tech giants’ such as Amazon and Google, to achieve more agile business models which allow them to rapidly innovate.
Accenture expects that these new businesses models will impact nearly 80 percent of existing bank revenues by 2020. As a result, finserv companies urgently need to undertake a digital metamorphosis to grow and compete with these challengers.
This means throwing off the restraints of legacy systems, striking a balance between innovation and bankers’ natural and understandable risk aversion, and committing to emerging technologies such as artificial intelligence and blockchain.
Which technology do most financial institutions expect to implement?
Cloud computing is the best bet for financial services companies to achieve this transformation. The research shows that, for the most part, they are ahead of other businesses when it comes to cloud implementation. In fact, over half of the companies surveyed say that they will have cloud technology in place within a year.
However, they still show a preference for private cloud infrastructure, most likely due to security and compliance concerns. The best way to overcome these obstacles is to take a hybrid or multi-cloud approach, while using modern, container-based application architectures. By partnering with third-party managed service providers, financial services organisations can rely on these partners to fill any skills gaps.
In fact, 60 per cent of financial services companies surveyed by 451 Research said they expect to use a mix of clouds in combination with one another – slightly higher than the number for other businesses (58 per cent). This will allow the financial services industry to execute workloads in different environments which meet their business requirements, achieving both agility, cost efficiency, compliance and support.
Are there any other emerging technologies which financial institutes are prioritising?
As the financial sector transitions towards delivering enhanced customer service and greater insight than ever before, these companies will need to investigate container and container management technologies to support new cloud-native applications and the re-engineering of legacy apps.
This modern approach – adopting multi-cloud, being heavily containerised – creates the ideal platform for financial services companies to explore emerging technologies such as AI and blockchain. This is something recognised by 62 per cent of the sector’s IT managers, who believe multi-cloud will allow them to improve application performance and availability demands.
AI and machine learning represent a huge opportunity for the wider industry to automate manual processes and gain greater insights around customer behaviour than ever before, all while operating on reduced IT expenditure. Likewise, blockchain has the capacity to transform the way that transactions are conducted, impacting how financial institutions interact with each other. With blockchain-enabled transactions, companies such as MasterCard can create a digital ledger of transactions without the need for a central authority to manage these, making this both a swift and secure process. All of these technologies offer traditional businesses a chance to innovate and adapt at pace – putting them on par with disruptors.
What challenges are facing the FSI in its transformation?
Security and compliance are frequently touted as the biggest challenges to financial institutions adopting emerging technologies, yet 43 per cent of executives within the sector expect multi-cloud to help satisfy the granular compliance and security requirements.
The primary concern for financial institutions trying to implement new solutions is the acute skills shortage in relation to cloud platform expertise (46 per cent), information security (41 per cent) and machine learning / AI (37 per cent). This combination of demand for innovation coupled with related skill shortages will result in many businesses turning to managed services.
How is open source simplifying the adoption of these technologies for the financial services industry?
With a skills deficit the biggest challenge facing banks – particularly when attempting to deploy increasingly complex multi-cloud environments – open source will be key in enabling devops teams to access and fine tune software more effectively, while minimising disruption. New waves of innovation, particularly with emerging technologies such as AI and machine learning, are being powered by software that builds upon a collaborative effort.
As such, open source will be essential to financial services organisations striving to keep pace with the fast-moving nature of cloud, and realising the benefits of a continuous integration/continuous development (CI/CD) approach. Open source is not only cost effective, but also the key to faster and more reliable innovation, allowing the financial services industry to scale its infrastructure to meet enterprise needs. This will be crucial to competing with disruptors.
