Here are five areas we predict the financial services sector will prioritise for their technology strategies and budgets in the financial year 2018 / 19.
1. Data (its protection, storage, insights and use) will continue to be at the heart of strategy
Being data smart should be an imperative for all financial services companies, which have long collected masses of data on customers and markets. It’s widely known that much of that data is stored in silos throughout various parts of a company with no single view into all data that a customer has shared.
Without a 360-degree view, a company cannot make full use of that data to better serve the customer, anticipate their needs or direct customers to new services.
In the financial services wholesale banking sector, for example, customer data may provide more efficient ways to process payments. In retail banking, data can reveal what the customer wants beforethe customer even knows it. Disruptors know that customer experience is king after all. Amazon doesn’t win on price alone - it wins on consistency of customer experience. To have that, you have to know your customer really well, know what they’re interested in and what they’re going to do next.
Newer database technologies enable companies to ingest a wide variety of data and make it available for real-time analytics. Data is where many legacy players have the advantage, however disruptors have newer technologies and fewer data siloes making them more agile and able to better leverage value from their data.
2. Notifiable Data Breach Act (and GDPR) enforcement: it won’t be pretty but there’s opportunity for innovation.
At the. first reporting quarter ending March 2018, sixty breaches were notified to the OAIC at time of writing 1 which shows that data governance, increased transparency, consumer privacy, and investor and consumer protection is no longer a nice-to-have but a must-do. These breaches represent the tip of the iceberg, and the first large-scale post-NDB and GDPR-enforcement data breach will set the tone for the industry.
By embracing what’s required of regulations, companies can seize opportunities to improve data quality and their governance over that data. In so doing, they’ll not only comply with regulations, but will also be better positioned to use that data, with customer consent, in ways that benefit customers.
In this, there’s a great opportunity to use regulatory budgets to accelerate innovation.
3. But there are also harsh security realities: IT security budgets will need to increase accordingly.
As Facebook recently experienced with its data debacle involving 50 million users, knowing how data is being used and whether consent was given is critical to retaining customer trust. For almost all industries, consumer trust is king so budget allocation here will continue to rise.
We see there will be more money thrown at the problem, yet expect no decrease in occurrences of breaches (or at least announced breaches). Toward the latter half of 2018, smart enterprises will shift attention toward more behind-the-firewall protection such as data-level security enforcement within the database. Vendors that make this both turn-key and comprehensive will do well, because IT security budgets will need to increase as the volume and disclosure of breaches and incidents increases.
4. Blockchain and Artificial Intelligence = smarter data insights.
Blockchain technology is already beginning to enable a reduction in settlement and other manual intensive processes in the financial ecosystem. Almost 80% of financial services incumbents expect to adopt blockchain as part of an in-production system or process by 2020, PwC research shows. In many industries—in fact any that rely on record keeping—blockchain technology promises to reduce risk and enable more transparency and trust.
The list of potential uses for blockchain for example, in financial services is almost limitless, from settlements to smart contracts to trading to simplifying cross border payments. As for Artificial Intelligence, there’s not an industry that isn’t talking about, or investing in, or using AI, and we are now at the point of seeing use cases, and defining what successful AI outcomes will look like.
Both blockchain and AI will be put to better use if companies have a good handle on their data. AI, for instance, is only as good as the data that goes into it. If AI includes only a slice of a customer’s data—whether that customer be a consumer or a wholesale bank—the intelligence won’t be as sharp as possible or worse could lead to bad decision-making.
The more nimble a company is with data, the more quickly it can adopt new technologies, like AI and blockchain, that allow them to innovate and drive business outcomes faster, while at the same time maintaining the accuracy of the data, to deliver smarter data insights so expect this area to grow.
5. Data assets in the cloud: the need for hybrid cloud and cloud neutrality
Data logistics across various “boundaries” – on-premises, inter-cloud, inter-PaaS will become more of a“thing” in the new financial year as enterprises realise the need to maintain control over their data assets, particularly in a cloud/platform world.
Azure’s play in the hybrid cloud arena will make that space an active battleground for 2018/2019. This will also shine more of a light on cloud-neutral capabilities as many enterprises apply their traditional “two-vendor” strategies to the cloud. To continue unlocking and extracting value from data, it needs to be accessible on your terms, so that you retain ultimate control of the experience your brand delivers to customers. Hybrid cloud and cloud neutrality give you control of your data assets.
The reality is that the pace of change will only increase and the battle for the customer will become ever more competitive. Facing up to the challenges in your organisation, proactively exploring and learning about the opportunities that new technologies provide, and getting on board quickly with wider industry changes will pay dividends.
Australia and New Zealand have a reputation for innovation, and we believe the new financial year holds great opportunity for those who choose to embrace the next wave of digital transformation.
As the world’s experts at integrating data from silos, MarkLogic’s operational and transactional Enterprise NoSQL database platform empowers our customers to build next generation applications on a unified, 360-degree view of their data. Headquartered in Silicon Valley, MarkLogic has offices throughout the U.S., Europe, Asia, and Australia. Visit www.marklogic.com.