Financial services organizations have suffered through a lot of industry-changing events in 2017, and 2018 promises to be a doozy.
One of the biggest events of last year was the massive breach at Equifax, where the personal data of roughly 143 million people was compromised. The aftershocks of the breach are still being felt, as lawmakers weigh changes to the credit reporting industry, while the banking industry struggles with how to make systems less vulnerable to attack.
Cryptocurrencies like bitcoin have been a hot topic, polarizing experts and day traders alike. While most agree that blockchain has a big future in banking, many were surprised to see Goldman Sachs announce the 2018 formation of a digital currencies trading desk.
Then there’s AI, the threat from Silicon Valley, massive FinTech investment, the list goes on…
With technology transforming the industry at break-neck speed, the only sure bet in the financial services industry is change.
Financial Services & Changing Demographics
With so much growth and change in new, fundamentally different technologies, banking’s capacity to absorb it is being tested. While digital transformation is tough on most established behemoths, financial services has a particularly difficult battle ahead because these institutions evolved to be adept at carefully managing linear change.
Technology shifts aren’t the only challenge, they’re converging with profound demographic changes, as digitally native millennials have now become one of the largest generations in the history of the world, set to dominate consumer expectations.
At the same time, digital advances have provided access to banking for billions of previously unserved and underserved consumers worldwide, especially in less developed economies. Little is known about how these new banking consumers will change the way financial services works in the coming years, but the prevailing prediction is that they will.
Get Busy Changing, Or Get Busy Dying
The Center for Business Transformation says digital disruptors will displace four out of ten incumbent companies over the next five years. The reason? Inability to respond to changing market demands.
Agility in the face of this new, ever-changing reality is so fundamental to success, that younger tech-centric firms are often out-pacing their larger, established counterparts. Age-old monolithic banks are struggling to respond to change as fast as they can to compete with cloud and mobile-first disruptors like Square and Stripe, whose business models are almost entirely digital. As established banks evolve to try to keep up, the agility these firms need to survive requires business service architectures focused on modularization. As a result, applications and services are moving to highly distributed, multi-cloud, interdependent microservices and APIs.
To truly evolve and survive, all aspects of a business from customer engagement to fulfillment, and everything in between must embrace transformation as a constant, driving paradigm shifts in systems and process integration, and deeply influencing strategic decision-making at its core.
Survive & Thrive: How to Prepare for Change
While adaptable customer experiences and their underpinning processes are important, business functions must be enabled in such a way that they can change quickly too. The prevailing best practice to enable this is to shape business functions so that they can be modularized and used in multiple places. In today’s world, this is done by implementing isolated, independent microservices. As a result, cloud virtualization and infrastructure-as-a-service (IaaS) have become the rule, rather than the exception. Making changes and adjustments in these environments is simple, inexpensive, and immediate.
With constant change in applications and infrastructure, network agility is paramount, but networks such as MPLS and the equipment that drives them have remained largely unchanged. While SD-WANs and similar technologies have introduced some abstraction into site-to-site connectivity, they are often location, hardware, and service-provider specific. The modularity that makes thriving in a world of digital transformation possible requires a paradigm shift.
Here at NetFoundry, we realized that the world needed a totally new solution to securely and reliably deliver application interactions to any user, device, cloud, or network. So, we created our network infrastructure as a service platform to do just that. We bring software agility to networking, with military-grade security designed for the stringent compliance requirements of the financial services industry.