Russell Skingsley

When Banking and Digital Transformation collide

Blog Post created by Russell Skingsley on Sep 13, 2016

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Technology and banking have always shared a critical bond. From the minting of the currencies of ancient empires, to the introduction of world’s first ATM in 1967, through to today’s highly digitized banking sector. It is unsurprising therefore, that those in the industry are under constant pressure to bring new, compelling products to market, providing customers with easier and more efficient experiences.

The Asia-Pacific region, which includes several key financial hubs, has seen skyrocketing investment in banking solutions in recent years. According to Accenture, investment in FinTech in Asia-Pacific increased from US$880 million in 2014, to nearly US$3.5 billion in the first nine months of 2015.

So we recently got together with IDC Financial Insights to take an in-depth look at the state of IT in banks across the Asia-Pacific region and examine how the latest technology trends in Digital Transformation are creating new opportunities, and some challenges, for those in the sector.

 

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Feel free to register and download IDC’s Financial Insights infographic here.

 

According to IDC Financial Insights, there has been an average annual increase of 6% in IT spending in the last four years. However, 80% of banks see high total cost of ownership (TCO) in infrastructure related investments. This has driven many to adopt solutions designed to improve cost efficiency, a key factor in the rising popularity of all-flash storage in the region. Many anticipate massive change in the sector, predicting 15% of the traditional banking business will be gone by 2018, outpaced by more agile companies.

 

Those in the banking industry perceive the sector as being weak in many aspects of innovation, calling out 360-degree insights into customers, operations and risks as key focus areas. 90% still cite regulatory compliance as a ‘major concern’ despite the increase in their budgets. The IT market has been quick to respond to this, creating solutions to help those in regulated industries gain visibility and improve governance of their data, for example Hitachi Content Platform. When it comes to security, 25% of banks had faced a Severity 1 incident several times in the past year, and with downtime costing banks in the region an average of US$1.4 million per hour, these are breaches that banks can ill-afford.

                               

The changing priorities and focuses brought about by Digital Transformation are creating new opportunities for companies and vendors to stand out. Asia-Pacific has plenty of examples of early leaders that are shifting their approaches and strategies so they are primed for greater transformation.

 

Tier 1 banks in Hong Kong and Singapore are streamlining data processing so they can quickly detect any anomalies that could pose a threat to security. One of Australia’s ‘Big Four’ banks has implemented a turnkey system, allowing it to reduce the costs associated with meeting Dodd-Frank compliance. Banks in India are integrating storage solutions to reduce capex and embracing Pentaho-embedded analytics to enable the adoption of new mobile banking services through greater business insight. Meanwhile in China, tier 1 banks have consolidated their infrastructure, with one able to realize a 45% reduction in IT costs. Change is taking place across the region and the good news is that, according to IDC Financial Insights, 50% of the infrastructure spending of Asia-Pacific banks can be optimized by 2018.

 

The question for many will be ‘where to start?’ Here are a few steps to getting it right:

 

  • Optimise TCO and improving core application performance are important first steps. 
  • Take a smart, real-time approach to compliance – Use IT assets built for compliance to ensure growth, create a centralized comprehensive data set for compliance, view IT as a true data broker and run mission-critical workloads through virtualization and converged frameworks
  • Become an always-on enterprise - Ensure high availability for truly mission-critical apps, invest in always-on infrastructure and best practices, and adopt a zero RTO/RPO strategy to eliminate traditional IT failovers
  • Improve your capacity for innovation - Use data integration and analytics to identify growth, retain customers, optimize operations, mitigate risk, detect fraud, and ensure compliance. Adopt analytics to enhance data warehouse investments, optimize the management and use of data from various sources, using object storage for unstructured data

 

Embracing this kind of transformation offers huge potential for those in the Asia-Pacific banking sector. Companies looking to start their journey can sign-up to my upcoming webinar with IDC Financial Insights, where we will discuss some of these findings in more detail and answer any questions you might have Digital Transformation.

 

 

Russell Skingsley, Chief Technology Officer, APAC, Hitachi Data Systems

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