Whether it’s private wealth management or commercial banking, the financial services industry is steeped in tradition. That’s all beginning to change as the industry looks to shed its image of stodginess and reluctance to change in favor of more efficient and cost-effective ways of doing business.
Transitioning to digital processes — digital transformation — is now a top priority for industry CIOs, with more than 75% of retail banking execs and over 70% of insurance leaders eager to adopt more modern business models that drive profitability.
But talking about change is much different from actually making it. And financial services teams considering undertaking a digital transformation initiative will face a number of cultural, industry, and technical challenges that may make some rethink whether digital transformation is the right move for them right now.
Despite the obvious benefits of digitally transforming a business, planning and executing a transformation effort is often much easier said than done. Given the industry’s demand for service availability and emphasis on data and systems security, it’s especially hard to attempt any “rip and replace” of old systems to upgrade to more modern ones.
The reality is that transformation-minded financial services leaders face stiff resistance from a traditionally risk-averse culture born from a huge IT estate that supports a heavily regulated industry. Despite nearly half of all banking customers now interacting with their financial institutions only by digital channels — over 40% haven’t stepped foot in a physical bank location in six months — there’s still a strong resistance from the IT and compliance communities to change the way they’ve conducted business for years.
More than just a cultural issue, the move to modern systems and processes is also a technical and tactical challenge. Managing the technologies themselves — migrating to cloud-based systems, optimizing performance, enhancing security — requires a specific set of skills and expertise which is often lacking in organizations who haven’t had a need for those capabilities in the past.
Over two-thirds of CIOs believe there’s a major talent crisis in their field. And financial services CIOs are three times as likely to identify it as their barrier to success as compared to the next biggest barrier. That number increases further when talking about having the skills on staff to ensure data security, integrity, and compliance.
Already, financial services organizations must follow the stringent guidelines of the Federal Information Security Modernization Act (FISMA), along with other guidelines for safely processing, storing, and transmitting credit card information. Adding more security, compliance, and operational excellence requirements only makes it more difficult to staff properly.
In fact, some sources show that there are currently more than one million unfilled cybersecurity positions around the globe and that many of the vacant roles are often never filled — a figure expected to jump to approximately 1.8 million unfulfilled security positions by 2025, creating more competition for fewer resources.
Financial services companies determined to transform their businesses while simultaneously minimizing risk and headaches are increasingly turning to colocation services providers for help. Data center service experts like CoreSite can serve as a strategic partner in a digital transformation effort by providing critical operating support, planning guidance, and introducing customers to other potential vendors and partners to make the transformation a success.
Offloading essential tasks like server provisioning and performance monitoring to data center staff frees employees to pursue higher priority activities that drive innovation and revenue instead of wasting valuable time on routine operations. At the same time, selecting a colocation provider with a community of engaged customers and partners, along with an expansive network of facilities in edge markets closer to end users, provides ample opportunity to build new relationships and provide better, faster, and more reliable services to wider audiences.
More importantly, colocation is the ideal environment for any stage of cloud adoption and digital transformation. Modern data centers feature FISMA-compliant infrastructure with nearly unlimited options for growth in densely populated markets.
Now, CIOs can meet their obligations for maintaining a compliant and secure environment while also pursuing greater revenue generating opportunities, taking advantage of direct private connections to nearly any cloud provider they need for maximum scale and flexibility, with minimal nuisance and hardship.
The financial services industry is evolving to embrace new technologies and operating principles that can create new opportunities for sustainable growth. As more organizations invest in the latest cloud solutions — public, private, or hybrid — to gain scale, efficiency, and stronger cost controls, they’d be wise to get a little help along the way from the experts who can put their businesses on firm footing and build a strong foundation for success.