FIRING UP FINTECH: THE INFRASTRUCTURE BENEATH THE INNOVATION
With Fintech Connect Live happening in London this week, here’s our view on recent fintech trends and the role that network and cloud infrastructure plays in supporting the industry.
There’s an increasing amount of attention on the development of fintech, particularly in the capital markets space.
PwC’s annual report concluded that 82% of financial services incumbents expect to increase FinTech partnerships in the next three to five years.
For global banks, there has been a big emphasis on improving the consumer experience, which in most cases has been successful.
The knock-on effect comes back to the infrastructure supporting this new technology, which is made up of often legacy systems that have been around for decades.
As Anthony Woolley, UK Chief Information Officer at Société Générale told EY:
“Capital markets and investment banking firms invested heavily in digitising their front offices years ago, because there was a commercial imperative to do so. While ROEs were high, there was less of an immediate need to innovate in the back office.
That is no longer the case. The business model is changing, and we have to find new ways to reduce structural costs and simplify our architecture.”
To add to the pressure, the revised payment services directive (PSD2) is coming into effect in January 2018 which will have a significant impact on the retail side of the banking industry as it will mean that bank’s will no longer have a monopoly on account holders’ data.
Merchants like Amazon will be able to hold users’ bank data – with the users’ permission. Does the directive have the potential to revolutionise the retail banking industry?
What can banks do to optimise their infrastructure?
Firstly, act now. The growing threat on data security means it’s more important than ever to ensure customer data is protected and secure by investing in private or hybrid cloud infrastructure, for example.
Secondly, anticipate global opportunity. Areas of the world where regular banking in unviable give way to ‘unbanked’ population, India is one location where this market is particularly viable. The World Bank estimates that India accounts for 21 percent of the world’s unbanked population.
“Increased globalisation brings with it the convergence of social and cultural trends and the need for seamless flow of information across borders. It is in this new business environment that network capability and performance becomes the differentiator for companies that thrive in the connected world and those that struggle to survive.
The network is no longer just the piping and plumbing of the organisation. It’s the foundation that powers future growth potential.”
Want to find out more? Speak to our capital markets experts today.