Powering finance: Digital transformation of an ‘always on’ industry

Technology now [about] “How our customers engage with the bank, whether it’s through an app or a digital service,” says Mike Dargan, Group Head of Digital and Informatics and Executive Board Member at UBS. “As a corollary, technology is now an integral part of our business – it has a seat at the table and is part of our corporate strategy.”

Cloud based future

Cloud computing is supporting the financial services industry’s transition to an industry of “on-demand” data and services – where companies pay specialized service providers for storage and infrastructure when needed. These specialists are often the cloud service arms of Microsoft, Google, and Amazon. Only these tech companies, with their global networks of giant data centers, have enough computing power to meet the growing demands of the finance industry.

“If you look at all the new requirements coming from central banks or governments or even investors, financial services companies don’t have the data storage capacity to meet the needs,” says Scott Guthrie, executive vice president of Microsoft Cloud + AI Group.

When banks adopted the technology in the 1970s, they developed their own infrastructure, often installing servers in their data centers. The traditional system worked well when computing demand was relatively uniform. But in periods of extreme market volatility when the demand for computing power soared, banks needed to ensure that excess capacity continued to increase, even though it was redundant most of the time.

“We often talk about the explosive and resilient nature of the cloud,” Darjan says, referring to the idea that if a bank’s demand for computing power exceeds its normal level, its cloud partners can provide additional capacity immediately and charge only for the time it takes to be used. Not only does this save costs, but it also reduces carbon emissions because spare capacity for the entire industry is pooled at the cloud service provider level, rather than maintained by each company. Reliability and uptime are also improved, because cloud providers have multiple data centers that can support each other. Darjan says UBS is achieving more than 99.999%, or Six Sigma availability across its properties, driven in part by the move to the cloud.

Cloud providers provide not only storage and infrastructure, but also platforms and tools on which applications and services can be developed. Since Dargan joined UBS in 2016, its tech teams have switched from using 50 different development tools to a single cloud-based service they launched, called UBS DevCloud. Through this open ecosystem, built on the public cloud, UBS software engineers have a seamless experience developing, testing and releasing code within a single tool, enabling them to launch products quickly and update frequently.

The cloud also allows financial services companies to match best-in-class consumer applications and develop exceptional customer-facing services. “Best-in-class consumer apps that you use every day know exactly what you click and don’t click on, and exactly what their recommendation engines do. This means they can improve their features very quickly. Applying the same in our industry can change the rules of the game for our customers,” he says. Darjan. Guthrie says this desire to improve customer service, often amid competition from upstart digital competitors, was one of the original drivers in financial services’ embrace of cloud computing. “Financial services companies interested in it [provide] On mobile or online, consumer digital services were an early source of moving to the cloud.”

cultural development

For an industry that has pioneered the application of computing at scale through on-premises infrastructure, the shift of financial services companies to the cloud is a significant generational change. This naturally leads to a degree of caution.

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