With the standard being consistently raised by digital-native technology companies, what exactly will give financial institutions the competitive edge? Are financial institutions playing catch up or are they even in the right digital game?
In this interview, Niall Twomey, Fenergo’s Chief Technology Officer, discusses the critical need for cloud strategy in financial services, how the attitudes toward technology have changed in recent years, and how to pitch the benefits of cloud architecture to a CIO.
Niall, as a Chief Technology Officer, what kind of conversations are you having with Fenergo’s clients about Cloud technology, and how has that changed in the last year?
In the past, financial institutions have been quite slow to adapt to the cloud and quite risk averse too. That’s not because they don’t have the capabilities or the knowledge; it’s more because it is such a big change that impacts everything.
I’ve heard a lot of questions and hesitations about the cloud over the years but that has certainly changed in recent times. Three or four years ago, you’d mention cloud and CIOs really wouldn’t be interested. And it wasn’t a tech issue; it’s more where they are from a risk and data perspective.
Has that shift in attitude been dramatic?
Yeah, big time. Now, every financial institution has a cloud mandate. They’re looking more at the architecture they want and how they can properly integrate. The focus is more on the architecture now that the characteristics of cloud are more clearly known. Financial institutions really just want to hit those targets and get the benefits that cloud can deliver.
What is the key driver behind the move to cloud? Is the market pulling traditional FIs toward cloud or is it the momentum?
It’s a perfect storm right now. There are a number of forces at play.
On one side of the market, we have digital-first neo and challenger banks offering a very slick and digital experience and on the other side, we have consumers who are looking at their financial institution and saying, “I have a Revolut account, which I probably wouldn’t have if my digital banking experience wasn’t so poor”.
So FIs are being pulled forward because their customers sampled a digital bank or neobank and their expectations and digital appetites have changed. Established institutions are still behind the curve in terms of digital offerings but they are reacting to that market dynamic and playing catch-up with cloud and digital investments.
What sort of security questions do FIs raise? And how do you reassure them that the technology is safe?
A lot of the questions are mainly around data privacy – where is the data being stored, is it encrypted and so on. One of the pillars of a cloud strategy is strong architecture, where you can choose in which region you want your data to be stored.
The other pillar is monitoring and alerting, having a team reacting to alerts as well as dynamic reactions from the system itself to stay on top of anything suspicious. Finally, data identity management – who can access the information and how – is a big thing from an operations perspective.
How would you explain the technological and business benefits to a CIO and COO within a financial institution?
I’m going to put aside functionality and product capabilities. The one thing that every financial institution should aspire to is to onboard customers in a safer and faster way. This should be a core business goal.
With cloud, the cost of upgrading is eliminated and the cost of provisioning infrastructure, skills you need to maintain internally, the ability to flex capacity up and down because you’re in a project phase are all removed. The total cost of ownership is the big thing.
The second big factor is that it’s safe from a technology perspective. Best-in-class cybersecurity is a big issue for CIOs and COOs. Cloud offers safety, flexibility and scalability for things like rolling out, adding more users or taking on more clients.
Looking down the line, what discussions do you think you’ll be having around cloud in 5-10 years’ time?
I think the big game changer in the industry in the next few years will be around true usage and adoption of Artificial Intelligence and Machine Learning to make more intelligent decisions and look for fraudulent behavioural patterns.
Right now, AI/ML is not being deployed or utilised fully. We’ve just dipped our toe into the AI/ML water but we’ve yet to submerge ourselves in it. Also, over the next few years, we should see greater capabilities for financial institutions to consume not just the system, but online tech components and digital solutions seamlessly.
To hear more from Niall, you can click here to watch our latest webinar featuring AWS and RBC Global Asset Management. Want to read more about how to effectively manage cloud adoption journeys and simplify client experience? Download the full report.