Next-Generation Banking: Changes in the Industry
by Mike Steinharter, Vice President and General Manager
Banking & Capital Markets, CSC
Banking is changing radically and in practically every segment, from retail to cards, private wealth management to investment banking and capital markets. Banks face unprecedented pressures from a combination of three dramatic trends: the recent financial crisis, new regulatory demands and a greater need for risk management.
Each industry driver by itself would be a major challenge. Consider regulatory demands: In the United States, the Federal Reserve now drills down on nearly every banking function; and similar inspections occur in Australia, Europe and Asia. Taken together, these recent changes in the banking industry present an enormous challenge.
Banking is increasingly global. Payment systems are global. Capital markets are global. Money moves around the world as never before. Banking is now one of the most global businesses on Earth.
The competitive battleground for success in the industry is now about customer experience. Power has clearly changed hands, from the financial institution to the customer. Consumers now insist on how, when and where they’re going to be served. Banks must compete not only on customer service, but also on the overall customer experience.
Mobile technology, part of this customer shift, represents another huge change for bankers. Consumers enjoy being able to pay bills, shift funds and perform other banking transactions from their smartphones and tablets. But for banks, these mobile applications create serious challenges concerning cybersecurity, identity and access management, and even application design.
The technology solution
The solutions to these and many other banking challenges are fundamentally based on technology. Yesterday’s technologies are no match for today’s demands, as banks are becoming technology companies. They move bits of data around — valuable bits of data, to be sure. But in a very real sense, banks are data factories. To serve today’s connected customers, banks need to command next generation banking technology across channels; that means moving beyond banking’s traditional perspective of product silos.
Banks also need to adopt next-generation IT infrastructures and modernize their applications. Banks are now outsourcing some systems that, in the past, they wouldn’t have considered outsourcing. It also means making smart, effective use of a multi-cloud environment. Banks need to modernize and cloud-enable everything — from their biggest, most complex systems to their lightweight apps. They need to use data analytics to help with regulatory compliance. And they need to adapt their enterprise applications to interact with mobile devices.
The good news is, bankers are increasingly open to these banking industry changes. In our discussions with banking clients, we hear a willingness to try new strategies for cost-cutting and improving customer experience and intimacy. They understand that application modernization will be a top assignment for the next five to 10 years. And they know that at every step, CSC and our partners will be there to help.
For example, to get the greatest benefit from next-generation infrastructure options, many banks will need to create complex IT environments that combine public, private and hybrid clouds. CSC’s recent acquisition of ServiceMesh means we can help them orchestrate across multiple platforms.
Cybersecurity remains a top concern for bankers considering a move to the cloud. And with some 2,000 cybersecurity professionals on hand, CSC can help banks move to the cloud safely and securely, while complying with industry and government rules, regulations and laws.
Our recently announced partnership with HCL Technologies will have a huge impact in the industry. HCL is a leading global IT services provider with deep banking experience, and our partnership is a true 50/50 alliance. SAP, our banking software platform partner, is there when banks need to upgrade their core banking systems, move to omnichannel options and begin operating their subsystems in the cloud.
These two partners are among many who will help us create opportunities for our clients to move to the next generation of banking. Add our relationships with EMC, AT&T, Cisco and now Amazon Web Services, and you have CSC in a truly unique position in the industry.
Mike Steinharter is vice president and general manager of Banking and Capital Markets at CSC.