IT, the saviour or enslaver of the Financial Industry?
Last month we visited a European Financial Services Technology summit in Portugal, where we were invited to host a presentation based on the changing world of IT. IT is obviously a growing challenge for financial institutions these days, so getting the decision makers together under the Portuguese sun is always interesting in terms of sharing problems, ideas and solutions. Banks, brokers, investment & insurance companies, even anti-money laundering organizations all admitted to be more and more dependent on IT. This is not a bad situation at all, but it does give food for thought on how they, and even we, manage that situation.
As I have mentioned before, the financial industry is, just like a lot of other industries, subject to change. Mobile banking, online banking, cloud or not to cloud, in- or outsourcing were integral to the agenda of the attendees and as such were debated, challenged and discussed regularly over the 3 days.
Presentation
Just like Barrack Obama 2 years ago, I based my presentation on ‘Change’, albeit I hold slightly lower ambitions in terms of taking over the world. I highlighted the fact that we are living in a world of change, and that Financial Institutions need their IT to be designed to enable change. And, even more importantly, that should not be measured on the here and now, but planned to incorporate future business demands. So we simply propose to create an IT strategy which is adaptable to changes in success and failure, in increase and decrease, in change of technology and in change of infrastructural possibilities. This was not to suggest a strategy of outsourcing, although it is sometimes easier to focus and manage on qualitative goals and requirements, but that insourcing is an essential element to achieving those goals. As long as you know how adaptable your roadmap must be, it is also possible to create and include an in-house strategy.
Discussion
After my presentation there was an interesting question from the IT director of a British bank asking who was responsible and liable if his services had an outage of 24 – 48 hours. Obviously afraid of outsourcing, he was helped by two of his peers before I could answer. The CIO from a large British/South African Bank and a Program manager of a well known Dutch bank answered the question with the simple but true argument: ‘liability is not reduced or simplified if IT is managed in-house, but it could be argued you are less likely the incur a problem by utilizing outsourcing due to the fact a Bank’s core business is banking and the outsourcing partners core business is IT’. To further make their point it was also said that ‘if downtime of 48 hours could results in loss of your online status as a bank, then that ‘business requirement’ will demand a high level of redundancy, meaning whoever is liable will make the decision between cost and assurance, no matter if it is out- or insourced’.
As a final note it left me to add that such a long downtime is unthinkable in the world of internet/extranet management, especially where Jitscale is employed.
Cloud is not the goal
It was interesting to see that multiple financial companies are still struggling with their ‘cloud strategy’. Where is my data? What about Basel2 and Basel3? What about the (renewed) Patriot Act? Is the performance good enough? Which cloud provider to choose and how do I cope with vendor locking of the cloud vendor etc? In the first round table discussion of the summit I shared my vision on this subject as clearly and simply as possible: “(The use of) Cloud should never be a goal on it self, but it could be a way to achieve the goal”.
Different Approach
It is our opinion that companies need to define new IT strategies to remain competitive and that these new strategies should have 3 basic changes over the traditional models.
The first change is the agility. A single vendor outsource approach, or wholly in-house IT could make you susceptible if outages occur.
The second change is to target where your organization wants to be in 5 years time, instead of planning around where your technology and strategy are today, and then base your strategy on that goal.
The third change is to focus on the business requirements. IT can become the enabler for change and growth and can be THE difference in achieving those business goals.
What higher purpose is your IT trying to fulfill? Probably, or maybe that should say hopefully, facilitating the business side of the organization with tools to create growth for the company.
But there are other considerations: What are the requirements of the legal departments, their governing body with specific rules, what are the geographical challenges (if any), is there a specific part of data which should always be on the company’s own premises, do you know what data is private and not-private, is there a need or wish to re-use current facilities, what is the budget and is it linked to the revenue of the business, what is the uptime need – with so many challenges it is difficult to decide on the need-to-have’s and must-to-have’s?
After many in-depth discussions and with significant interest from the attendees, Jitscale has successfully increased their network and positively impacted some of the leading figures in the Financial Services Industry. If you share some similar challenges or would simply like to discuss the possibility of Jitscale improving your own IT landscape please contact us.
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