Financial services sector sees cloud technology enabling ambitious transformation
Over the past year, traditional financial services companies have woken up to the possibility of change. Though historically slow to embrace new technologies, the sector has been at the forefront of corporate transformation efforts as it looks for ways to retain and engage customers in the face of lockdowns and a rise in competition from more agile fintech players.
According to the Bank of Thailand (BOT), one of the most prominent advancements in Thai fintech is the development of QR Code standardization for payment via mobile devices. The adoption of biometrics technology to verify identity combined with the development of the National Digital ID (NDID, the central platform to exchange data for identity verification), will allow customers to be able to complete transactions without having to submit multiple documents. They will be able to open a bank account or apply for a loan much more easily, for example.
A plus for the industry is that the pandemic has dramatically increased the need for its services—digital banking and payments, insurance, and customer support services. The challenge is of course meeting those expectations.
T Leasing Co., Ltd. is one of Thailand’s top five leading hire purchase businesses in a highly competitive motorcycle industry that increased sales volume in 2020 to 1.5-1.6 million units.
T Leasing has gained a competitive advantage by upgrading its core system to support the current operations, with approval cases now totaling more than 500 motorcycles a month.
The company has deployed the H-Meter 2020 application, a modern solution developed by Senior Com Co., Ltd. Running on Nutanix’ hyperconverged infrastructure, this application supports the entire hire purchase business, reducing the 15 minute-hire purchase approval process to only 5 minutes. The solution has been designed to comply with regulations while providing maximum security. The adoption of Chatbot and other new technologies will accelerate the company’s digital transformation and meet the needs of consumers.
Around a quarter of consumers have abandoned in-person banking, with more than 70 percent banking digitally every week. FICO research indicates that 59% of Thai customers prefer to engage with their main bank digitally during financial hardship (44% via the mobile banking app and 15% through internet banking). There is the sense that traditional institutions will need to become more agile and fast-track innovations to survive this shift. This year we can expect to see a rush to capitalise on emerging technologies to automate manual processes, develop more digital products and deliver better overall service.
Central to this new model will be IT infrastructure built on hybrid and multicloud solutions. Adoption of the hybrid cloud is growing across industries but the regulatory and security requirements specific to financial services make it especially helpful in this environment: while the public cloud offers flexibility and agility, the private cloud offers high levels of control and security. The hybrid and muticloud platforms integrate the features of both public and private clouds.
Happily, governments and the public in Asia-Pacific want this all to work. Financial services industry transformation is a focus in terms of government policy in key markets, including Thailand. The Bank of Thailand (BOT) is pushing for financial innovation along with a complete ecosystem in many areas, supporting it through testing and developing mechanisms in compliance with the ‘regulatory sandbox’. The test, under the BOT’s regulatory sandbox, will allow financial and non-financial institutions to develop and implement modern technology in limited scope before broader services are offered to customers. Testing will ensure that customers can fully understand and leverage new technology with speed and security. Currently, many businesses are trialing and launching new products and services to market, such as securities and funds trading, (insurance) policy purchasing service, loan service, and service provider or electronic networks. These innovations support the process of bringing borrowers and lenders together.
Furthermore, the BOT has also implemented two pilot projects. ‘Project Inthanon’ is a collaborative effort to develop and test the potential of using blockchain for funds transfer between financial institutions. ‘Distributed Ledger Technology (DLT) Scripless Bond’, is the new platform leveraging blockchain technology for bond issuance. This will simplify the process, reduce operational complexity, and lower overall time and costs for those involved.
To succeed, financial services companies need to be as agile and open minded as their customers in their use of technology, which is set to drive everything from the creation of new business and economic models to personalisation and data analysis. Hybrid and multicloud strategies will underpin this adoption.
Our recent Financial Services Enterprise Cloud Index Report shows that most companies are looking at IT more strategically due to the pandemic. As part of this, more than half are investing more in hybrid cloud services. They are also putting in place a hyperconverged infrastructure (HCI), which will make cloud technology easier to implement and scale. HCI simplifies the task of data center modernization and enables the unification of private and public clouds.
Around half our respondents said their companies have HCI fully deployed or are in the process of doing so, while another 38 percent expect this to happen within the next one to two years.
They see a modern IT infrastructure as an enabler of speed and security as well as a cost-saving mechanism. Their priorities are to gain more control over IT resource usage (59 percent), to gain speed (58 percent) and flexibility (55 percent), and to save money (31 percent). In one example from India, Nutanix private cloud technology is helping RBL Bank run more smoothly. The company has seen call-centre staff efficiency rise by 35 percent, and reports that its applications and databases run five times faster. Database administration is reportedly 90 percent more efficient, and the technology has helped speed-up the marketing of new services, with tangible customer benefits during the pandemic.
As hybrid cloud gains adoption, application modernization has emerged as a key focus area for FSI customers. With this, calls for a simplified control plane & platform that can span a multicloud environment supporting legacy, as well as modern microservices-based applications, is emerging as a key requirement. Nutanix technology helps customers bridge this gap. By automating application roll-out process across clouds for infrastructure, databases, applications, security framework and more, our customers have experienced as much as 90 percent better efficiency in their business response times and day-two operations.
Whatever turn Covid-19 now takes, the financial services sector’s upgrade is well underway. Its newfound focus on technology points to an appetite for innovation that is likely to extend well beyond the current situation that we find ourselves in. To ensure the momentum continues, hybrid and multicloud should be top priorities for any IT strategy in this space.
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