Technology, Agility and Cloud - 3 Challenges for the CIO
By Mitesh Soni, Senior Director of Innovation and Fintech, Finastra
CIOs need to increasing think beyond pure technology play. The cultural adoption of new digital capabilities is equally important but challenging to master. Success is often determined by how financial institutions adapt and respond to the introduction of these technologies.
Indeed, outdated mindsets rather than legacy technology often create the most significant barriers to change. For example, there are still concerns about how AI and robotics will eliminate human roles, whilst many of the latest reports predict a net increase in new jobs across the world. This problem is tied to education of the workforce and requires balanced investment in reskilling and retooling the existing workforce, in tandem with recruiting new skills and technologies. And they must do this while keeping business as usual on track, leading digital transformation programs and avoiding panic.
Training, Agility and Investment
Training plays a vital role in the change process, and successful initiatives begin with securing buy-in from the top. As well as establishing buy-in at the executive leadership level, organizations need to introduce cultural change by building more agile, non-hierarchical working practices and a mindset of continuous learning. This extends to talent management, recruitment and retention practices, well beyond a previously siloed IT department, but still influenced if not completely led by the CIO.
The stark truth is that businesses across the sector are undergoing significant change, driven by technology that is empowering customers to push for ever better digital customer experiences. Organizations that don’t adapt to a digital-first strategy, which puts customers at the front and center of everything they do, can only lose out to more nimble newcomers.
As well as establishing buy-in at the executive leadership level, organizations need to introduce cultural change by building more agile, non-hierarchical working practices and a mindset of continuous learning
Having established the right foundations, a key priority is to establish a pipeline of technology-led programs of change aligned to the business goals. In the financial sector, regulations like PSD2 continue to drive costs as compliance initiatives. However, these should be considered as strategic opportunities. Having always collected vast amounts of customer data, banks have not been able to fully optimize their use of it because of the limits on processing power available or siloed data architectures.
Now, all that changes as cloud technologies bring almost limitless amounts of power, big data and AI together with powerful migration tools that reconfigure data architectures to be more suited for ubiquitous computing environments.
Looking ahead, while 2019 is the year of big data, AI and cloud adoption, next year will see more adoption of technologies such as the Internet of Things (IoT), edge computing and robotics. Blockchain and distributed ledgers will emerge as critical technologies for networks of businesses that want to collaborate, but this will require whole ecosystems to mobilize and converge on standards. The speed of consensus purely drives the adoption in this space . Blockchain is simple technology, but it’s a team sport and adoption can be a complex business.
Collaborate to Innovate
We are also noticing increased collaboration between Fintechs, experimenting fast with new technologies and collaborating with banks. This achieves the objectives of the banks that wish to innovate at speed, and also the Fintechs that are seeking access to customers and scale. The platform model is fast emerging as a new standard, enabling traditional financial institutions to introduce innovative processes and better user experiences without completely ripping up the rule book and starting from scratch. This means they don’t get left behind in the digital transformation race.
This phase of adoption, in which banks address AI, big data, robotics, and platformification, is not a ‘one and done’ process. Instead, it is likely to last for the next five to ten years, improving the flexibility and responsiveness of financial institutions along the way.
Finally, data security will continue to be of huge importance to banks, especially following the introduction of GDPR in 2018. Banks spend massive amounts of money on data security, but there is more and more cybercrime taking place all over the world. It is quite likely that the next software unicorns will be invented in this area, given the size of the opportunity and demand in the space.
Having said that, CIOs at most banks are taking a long hard look at the costs and risks involved in running their own data centers and considering the migration to cloud providers who spend billions on security each year. This is increasingly becoming a more natural choice to make.
The typical bank CIO’s to-do list is longer and more varied than ever before. There has never been a better time to explore the talents of an open innovation ecosystem and leverage resources across a collaborative, agile business, while always keeping changing customer requirements in mind.