Digitally transforming financial services - Dell Technologies
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Digitally transforming financial services
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INTRODUCTION
T
he financial world is a centrepiece Technology is set to transform everything
of the global economy. Yet like other from high frequency trading, to risk
markets, finance is being impacted by management, to improving the customer
successive, disruptive revolutions in experience.
technology. Digital transformation can enable the
The financial services industry (FSI) is also journey, empowering financial services
under pressure from various directions: organisations to make better decisions
• Nimble new competitors are entering that drive better outcomes. It can benefit
from fintech and other sectors both you and your customers.
• Customer volatility and empowerment
is increasing
• Risk related to new regulations and
security threats has been brought
centre-stage
Investment in the right technology can
allow organisations to:
• Compete with challenges presented by
new financial instruments
• Better understand customers and
markets, and even predict future
trends, by analysing data
• Automate and simplify compliance
and security4
THE COMPETITIVE
SQUEEZE
F Payment Services Directive
inancial institutions are facing many
new kinds of competition, from non- (PSD2) expands the market
banks to digital innovators exploiting new
But perhaps the biggest competitive
waves of technology. The pull of new
shake-up is the EU’s new Payment
smart services means big banks can no
Services Directive, PSD2, which became
longer rely on customer inertia to maintain
law in 2018. It softens restrictions on
market share.
services the non-banks can offer, helping
smaller institutions compete with bigger
New challengers
players.
New players have entered the finance
PSD2 also requires banks to harmonise
market and more keep coming in.
governance frameworks and make their
Supermarkets and car brands, for
APIs public. The goal is a unified European
example, now offer services independent
finance market, where consumers can
of banks.
easily buy products from any country.
Technology companies like Apple and
PayPal have created new, non-traditional “PSD2 is set to accelerate
payment systems. Innovations like these, industry disruption”
along with slick new mobile and online Source: PwC: PSD2 – a game changing regulation
services, are loosening customers’ Competition is set to intensify whilst the
relationships with traditional financial overall market grows. Traditional financial
services. Peer-to-peer lending (P2P) has services with recognised brands are in a
also increased competition in what has good starting position, provided they are
been considered a profitable, long-term well prepared.
banking product.
However, with the right technology in
place, there is nothing to stop banks
competing in these new spaces.5 $11 billion IN BANKS’ ANNUAL PROFIT IS AT RISK FROM THE NEW PLAYERS FROM 2015 TO 2020 AND BEYOND ACCORDING TO GOLDMAN SACHS Source: Accenture
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ENGAGING CUSTOMERS
I
t’s becoming easier to switch between deeper profiling. It could also help create
a wider array of financial services, and better advice and products, such as:
many are experiencing greater customer • A financial health report delivered
volatility. on each customer’s payday, with
contextual advice on saving and
But customer loyalty can still be achieved
spending
by leveraging smart insights.
• A stock portfolio that advises owners
on when to buy and sell
• Fairer insurance premiums that reward
more careful customers
50%
Products like these are dependent on the
ability to analyse and leverage insights
from huge volumes of data. How ready is
ADOPTION OF FINTECH PROVIDERS
your organisation for the challenge?
FOR MONEY TRANSFER AND PAYMENT
SERVICES ROSE FROM 18% IN 2015 TO
50% IN 2017.
60%
Source: Ernst & Young
OF GLOBAL CONSUMERS AGREE THAT
A 360° customer view BANKS HAVE AN IMPORTANT ROLE TO
Close customer contact is a key driver PLAY IN HELPING PEOPLE ACHIEVE
in customer loyalty. So imagine having a THEIR LIFE GOALS THROUGH THEIR
complete overview of how, why and when EXPERTISE.
each customer interacts with you.
Source: Ernst & Young
This ‘360° customer view’ can help
financial services to achieve broader,7 Stronger segmentation “At the heart of any successful segmentation strategy is the ability to identify and assemble the right data points” Source: PWC report ‘Customer segmentation’ Another way to increase repeat business is through personalised offers and communications, targeted at fine-grained customer segments. This is part of the 360° view but on a macro level, where all views are put together and grouped by various attributes. For instance, Jane may form a household with John, have the same credit risk as Saira, and a similar income level to Fatma. Each group can be offered highly relevant products, provided the insights are available. As customer data volumes grow and methods advance, many organisations are now working towards ‘predictive analytics’: the ability to predict trends, consumer behaviour and capital flows. How could accurate predictions benefit your organisation?
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MANAGING RISK
S
trong financial performance, stability
and liquidity are founded on effective
risk management. It’s also a cornerstone 50%
of regulatory compliance, while
CONSULTANCY FIRM KPMG
managing cyber security risks is of equal
ESTIMATES THAT APPLYING BIG DATA
importance.
TECHNIQUES TO RISK ANALYSIS CAN
It’s a complex set of responsibilities, which INCREASE ITS EFFECTIVENESS BY
the right infrastructure can help to simplify HALF
and automate. Source: Compact
Risk analysis
Many financial services organisations
place risk analysis at the heart of all Managing security risks
64%
operations. Having accurate systems,
capable of making timely decisions
based on reliable data from across the
organisation and beyond, has therefore OF BANKS SAY SECURITY IS THEIR #1
never been more important. CONCERN, ACCORDING TO GARTNER.
Risk can now be constantly monitored, by
Actively malicious threats include
automated systems that compare it with
hackers, thieves and defrauders, as well
benchmark data for ‘normal’ behaviour.
as unreliable insiders. Employee error is
Users and actions can be grouped too,
another major risk to data security.
according to behaviour and risk pattern. It
IT vendors have stepped up to the
can mean better outcomes, with reduced
plate, building features like hardware
effort.
cryptography – where all data entering the
system is automatically protected – into
modern servers.9 New technologies such as blockchain, a distributed ledger system that promises more-trusted transactions, could provide new security solutions. But blockchain also raises new regulatory questions. Financial services organisations often partner with experts to manage their cybersecurity capabilities: 24/7 system uptime and monitoring, specialist services, plus tried-and-tested threat detection algorithms. 95% OF DATA BREACHES OCCUR AT USER ENDPOINTS, MOST TYPICALLY STARTING WITH AN EMAIL OR AN INNOCENT VISIT TO A MALICIOUS WEBSITE. Source: 2017 Verizon Data Breach Digest
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MANAGING RISK
Achieving compliance
£1 billion
A stack of new regulations has changed
STOLEN THROUGH CREDIT AND DEBIT the finance world in recent years. GDPR,
CARD FRAUD IN 2017 PSD2 and Basel III are a lot to deal with.
Source: Independent For many organisations aiming for
compliance, getting there proves difficult
with existing IT setups. And trying to do it
Fraud and threat detection
all manually could be crippling.
Fraud can be doubly damaging to financial
What if compliance was built in? An IT
services, through direct losses and broken
process designed around regulatory
customer trust.
frameworks, and able to automate
Modern fraud detection uses machine compliance tasks, could save thousands
learning, a branch of AI, to analyse data of hours’ work. It may require an
flows and behaviours to identify fraudulent organisation-wide transformation process,
transactions. It’s become an arms race: but the long-term benefits could be
the power and speed of banks to analyse transformative too.
transactions in real-time, against the
growing numbers of transactions and
fraudsters.
Is your infrastructure ready for today’s Top 5
battle, and tomorrow’s? GLOBAL BANKING LEADERS CITE
REGULATORY CALIBRATION AND
MITIGATING CYBER RISK AS TWO
OF THE TOP MACRO THEMES FOR
BANKING.
Source: Deloitte, 2018 Banking Industry Outlook12
IT TRANSFORMATION AND
YOUR GROWTH POTENTIAL
M
odern IT infrastructure is critical enable you to build scalable and agile
to success in today’s financial solutions that deliver new value to your
world. Whether your goal is full digital customers.
transformation, or to modernise key
Partnership with us means access to:
components of IT infrastructure, Dell EMC
• Dell EMC Customer Solution Centres,
has the solutions and partnerships to help
where world class IT experts
you drive growth in your business. Best
collaborate and share best practices.
of breed servers, storage, networking,
• in-depth discussions of effective
and data protection, plus transformative
strategies using briefings, workshops
converged systems, can accelerate your
and proofs of concept which can help
journey – however large your business or
you reduce risks associated with new
ambitions.
technology investments, and speed up
Market pressures and industry regulations implementation
are changing financial services.
• our HPC and AI Innovation Lab, which
Businesses are being pushed to analyse
will give you access to thousands
faster, be more decisive and deliver better
of servers, powerful HPC clusters,
services. Security, reliability and uptime sophisticated storage and networking,
are crucial in this process. And many are to validate and test at scale.
looking to emerging technologies, such as
No two businesses have the same goals
blockchain, machine learning and AI, as
and needs, but to stay competitive,
the answer to these needs.
investing in the right technology is
Few can chart this course alone. So essential.
whether the right solution includes
realtime analytics, fraud detection or other
Talk to Dell EMC about how
tools of transformation, Dell EMC offers we can support your journey
you genuine partnership. Our end-to-end with products and solutions
portfolio of systems powered by engineered to accelerate
Intel® Xeon® processors, storage, transformation and business
networking, software and services can
growth.13 “Financial services are one of the first movers in embracing technology to better serve our customers. [...] As one of the world’s biggest users of Dell EMC, we spend approximately $9 billion a year on technology, including infrastructure as well as cloud computing, big data analytics and cybersecurity. We make sure we spend wisely and select our partners very carefully. [...] I’ve known Michael Dell for 30 years. I’m thrilled for [him] and the new company, and we are eager to see everything they create in the future.” Jamie Dimon Chairman and CEO of JPMorgan Chase
Accelerate Digital Transformation and Financial Services innovation based on technology and data with Dell EMC and Intel®, with solutions that can help financial institutions to deliver next generation services and new value to their customers. ©2018 Dell EMC, All rights reserved. Dell EMC, the Dell EMC logo and products — as identified in this document — are registered trademarks of Dell, Inc. in the U.S.A. and/or other countries. No part of this document may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording for any purpose without the written permission of Dell Inc (“Dell”) or its subsidiaries. Dell EMC disclaims proprietary interest in the marks and names of others. Dell EMC service offerings do not affect customer’s statutory rights. Availability and terms of Dell EMC Services vary by region. Terms and Conditions of Sales, Service and Finance apply and are available on request or at Dell.co.uk/terms. Dell Corporation Limited. Registered in England. Reg. No. 02081369 Dell House, The Boulevard, Cain Road, Bracknell, Berkshire, RG12 1LF, UK. Intel, the Intel logo, Intel Inside, and Xeon are trademarks of Intel Corporation or its subsidiaries in the U.S. and/or other countries.
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