Financial services firms today can’t afford to simply “bolt on” the latest software services and features their customers want. They need to revamp existing work processes and embrace the DevOps methodology that will allow them to build these changes now and in the future.
The digital transformation has never been an easy change for financial services firms to make. Their legacy systems were built for resilience, security, and compliance and are frequently too cumbersome to respond with agility to what their customers need. But today, banks and FS firms live in a rapidly evolving world, where digital startups can innovate in months instead of years to offer new services and software.
Recently the pace of this transformation has accelerated even faster, as the COVID pandemic supercharged the transition to the online economy and forever altered the foundations of consumer need and expectation. A McKinsey Financial Decision Maker Pulse Survey run in mid- May 2020 found that in Italy, Spain, and the United States, 15% to 20% of customers surveyed expect to increase their use of digital channels once the crisis has passed. Other markets, including the UK and China, ranged from 5% to 13%. Perhaps more importantly, the preference for handling everyday transactions digitally is as high as about 60% to 85% across Western European markets, even for customers 65 years of age and older.
Increasingly, banks are turning to DevOps tools, practices, and ideas to win the race to deliver features and services faster, while still meeting their requirements for security and compliance. In a DevOps environment, the developers of the software and the operations engineers work together throughout the lifecycle of the product, from design to production, from launch to maintenance and support. This way of working offers financial firms the ability to modernize their back-end systems and processes faster, while working on front-end software agilely, in response to customer need.
The disruptors in the financial services space have been exploiting speed-to-market as a way to get a jump on incumbent companies. The large multinational firms are like ocean liners, slow to turn to a new direction, while fintechs are speedboats, agile and adaptable. To compete, traditional firms need to increase their speed of digital delivery, while maintaining regulatory standards and customer trust.
Initially, financial services firms were wary of adopting the DevOps methodology because of a perceived compromise on levels of security. But early adopters have reported the opposite. This agile approach allows security professionals to integrate their portion of the software earlier in the development process. The process also involves automated testing of the software piece by piece at the unit and integration levels, which allows the developing program to be security tested along the way.
In more typical software development, security isn’t considered until the end of the process, often just before deployment. This means that security is bolted on at the end instead of being baked in from the start. With DevOps, the security team can analyze the code and run penetrating tests to identify, and eliminate, issues at every step. DevOps can also be used post-launch, to push out security updates to mitigate new threats.
For financial services firms, becoming more digitally responsive is not just about responding to customer expectations. There is a real risk that existing IT infrastructures can become obsolete, be disrupted, or simply cost the business time and money.
Banks often keep outdated technologies related to certain geographies, specialized products, or unique processes. But maintaining these systems, and integrating them with newer models, increases both the complexity and the cost of the overall IT infrastructure. At the same time, the firm’s ability to run new products and features agilely and responsively is hampered. For example, if a bank can’t quickly respond and adapt to user feedback that its mobile banking app is clunky and unintuitive, that creates an opening for a challenger bank to swoop in.
The DevOps methodology is as much a cultural change as it is an operational one. By bringing various departments together to work toward a common goal, it also promotes a different way of working in an organization. But the benefit is not only the ability to respond with agility to customer and market demands today; it’s also embedding the process by which a financial service firm answers the challenges of the future.
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Harris Milman is a Technical Account Manager at NetApp and has been with the company for 12 years. He also has 10 years of experience as a Systems Engineer. He is a proud graduate of the University of Georgia - Terry College of Business with a BBA degree in Management Information Systems.
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