Business Applications

Many banks started with systems built more than 40 years ago, when the requirements consisted of accounting for products and business transactions between 8 AM and 5 PM, only in branches, without real-time processing. So, moving to digital and now remote access has been hard and many banks still have significant legacy.

Retail banks also need to reduce the cost to serve against the competition (Digital-only banks costs are low ($26 to $65 – per account compared with $220 for a mainstream bank).

Banks are looking to partners to help them re-platform applications, introduce SaaS applications, or to create an API environment to surround legacy applications to allow modern digital platforms to be introduced and remote working to be allowed. Containerisation of legacy applications will be a necessary step in the large-scale migration of workloads to public cloud and allow workloads to shift across a hybrid multi-cloud architecture.

Large banks spending on cybersecurity has more than doubled since 2015 in some cases. This will likely continue at annual growth rates of about 10%. A considerable portion will go to cloud security, reflecting the shift to cloud-based business models.

Compute & Cloud

By their very nature digital platforms leverage hyperscale infrastructure from cloud providers in computing, data storage and security to deliver scale, reliability and customer experience. Banks were slow to adopt cloud due to security and regulatory concerns, but adoption is now growing fast.

There will be a major shift toward cloud as the primary venue for workloads over the next 2 years, with public cloud IaaS and PaaS serving as the primary environment for 28% of workloads, compared to just 9% today. 43% of financial services companies expect to boost spending in private cloud over the next year, while hybrid cloud is expected to grow by 39% over a five year period. Agility tops the list of cloud adoption drivers (47%), followed by cost savings (41%), performance and availability. Cloud security controls are becoming a selling point for cloud adoption as they provide great transparency and manageability than datacentre solutions.

Multi-cloud architectures are seen as key to delivering agility, cost and performance while addressing security and compliance challenges. Eventually, container-driven application portability in a hybrid or multi-cloud IT architecture will enable the multi-directional movement of workloads to best execution venues on an ongoing basis for optimisation of cost and application performance. Unsurprisingly, 81% believe a multi-cloud strategy will become a regulatory prerequisite after several years of regulatory focus on cloud technologies in the UK and the US. Skill shortages are key inhibitor with banks seeking cloud platform, security and machine learning expertise.

Digital Workplace

Organisations must now provide a digitally enabled, flexible and collaborative working experience to attract and retain staff. They must also move beyond the fast reactions required to achieve a lockdown, where over 80% worked from home.

A modern collaborative digital workplace is critical to a remotely located workforce. It ranges from access to HR applications and core business applications to e-mail, instant messaging and enterprise social media tools and virtual meeting tools. 

In the next normal, the percentage of basic banking needs handled in-branch could be as low as 5%. In some markets, this may translate to 25% fewer branches. Remaining branches will evolve into advice centres as banks offer wealth management products to a wider audience. This will drive new digital workplace and customer interaction needs in the branch.

Security, Compliance & Data Privacy

Security especially with data breaches is high priority issue. Consumers expect banks to operate at a very high level of security and privacy, this includes identity management, data security, privacy management and cybersecurity. Delivering this across a hybrid cloud and remote working environment is challenging given the ever-increasing number of attack surfaces.

As an example, most Americans now use online banking but 40% check their account for compromises every single day. During the pandemic banks have seen a 35% increase in fraud attempts through digital channels. The switch to remote work led to a 20% increase in actual attacks and a massive 500% increase in attempted attacks. Facility takeover fraud [i.e. where a bank account is hijacked by a fraudster] went up over 20% in the first nine months of 2020.  Identity theft is the second most-common type of fraud in Europe, and 56% of Europeans have experienced at least one type of fraud in the last two years. The statistics show 25% of Europeans exposed to any fraud suffered financial damage, causing a total loss of around €24 billion in two years.

Akamai reports that there were over 9,000 DDOS unique target attacks on the financial services industry over the past 18 months. Financial services represented over 40% of the total number of attacks, as well as having the highest level of attack, as measured by the median bits per second (bps). The attacks have cost financial institutions an average of $4.7 million, about 75% more than the similar costs for other organizations.