What Are the Key Challenges Facing the Modern Financial Services Sector?
Financial services firms are facing a number of critical challenges, including increasing trade volumes; periods of high market volatility; the introduction of new regulations, such as the Payment Services Directive (PSD2) and Fundamental Review of the Trading Book (FRTB); and the need to accelerate innovation.
Businesses across the sector are increasingly looking to address these challenges, while reducing costs and improving operational efficiencies. However, this is proving difficult. In the first of two blogs, we’ll explore the issues currently holding financial institutions back from innovating and preventing them from tackling the core challenges the industry is facing.
What’s Stopping Organisations Addressing These Challenges?
To a great extent, the existing technology infrastructures that are in place are simply not sufficiently attuned to the demands of the modern financial services environment. In fact, according to our survey of IT decision-makers within the financial/banking sector, more than half (51%) said processes across multiple applications are not well integrated across their organisations, while forty-three percent think their organisation is struggling to achieve a complete and accurate enterprise-level view of all their data.
Additionally, most businesses are having to handle ever-escalating data volumes – a challenge that is only going to intensify as IDC projects¹ that by 2025 a staggering 163 zettabytes of data will be generated per year, ten times the data generated in 2016.
Often, financial services organisations find it difficult to get a handle on the vast volumes of data they have at their disposal. This is due to the fact that the systems and infrastructure they have in place today tends to not support a sufficiently agile, interoperable approach. As a result, data is typically siloed, making it difficult for organisations to leverage it in order to advance their business goals and comply with regulatory requirements.
Overreliance on Legacy Systems
The inability to analyse data is compounded by a reliance on disconnected legacy systems and having multiple different kinds of databases and applications that operate in silos and don’t readily support high levels of integration.
Older organisations operating with huge data silos due to legacy systems are likely to have serious concerns to address to comply with new regulations like FRTB, which requires analysing larger data sets with smaller processing windows. For these organisations, significant investment in new technologies will be required to meet the regulatory stipulations. That said, even newer financial institutions are likely to encounter problems.
So, how exactly can businesses, both old and new, within the financial services sector overcome these issues? Find out in the second part of this blog here.
