Compliance and collaboration: Key data projects for banks in 2018

By David Beach | 15 March 2018

bobsguide's Dave Beach caught up with data infrastructure architects DataStax to learn more about the challenges and opportunities financial services will face in regards to data in the next 12 months. Martin James, Regional Vice President at DataStax, talks through how the crossover of technologies in other industries might be applied to banking in practice.

What are the business priorities for DataStax currently?

We have been working on some significant IT projects with high street banks and building societies in the UK - all banks have PSD2 to prepare for, while we have also seen investment banking teams rush to support MiFIDII  as well. Each of these compliance projects has been a big investment for the banks, and they have to see business value out of their deployments.

What we have seen is that this has forced teams to collaborate around data more closely. Whereas previously, this would have been a compliance project on its own, the size and scope for these initiatives has encouraged the bank IT teams to look at the wider market context and who else might have to get involved internally. This has helped them build bridges, secure more budget and look at the longer term impact of their decisions.

Alongside this, we have seen some new partnerships that we signed in 2017 start to develop for customers. For example, we are working with some of the leading fintech companies in London on their developments around AI, analytics and real-time customer experience. Companies like NCR, Asset Control and Feedzai are great partners and they are basing their approach on DataStax Enterprise. In addition, leading global systems integrators like Accenture and Capgemini are promoting DataStax within their client projects; a great indicator of our market maturity.

2017 was the year banks acknowledged (at least in spirit) that cleaner and richer data would provide a definitive edge. What will 2018 be known for?

After the delivery of MiFIDII, PSD2 and GDPR, I hope that this year will mark the start of two things.

The first is successful ongoing compliance operations - each of these areas of regulation is aimed at protecting customers against risk, while also supporting the innovation and development that banks are looking to achieve. These projects are not “one and done” items - they have an effect on ongoing operations that have to be in place for years. However, that does not mean they should be restrictive on business development and innovation. Instead, I think they should act as guardrails for new ways of working.

The second is how data will support more collaboration across banking departments. Think about it - how well does your bank know you? For the best banking IT teams, it was sometimes difficult to provide the full picture of each customer, even when they held multiple accounts. Banks can use their data to break out of internal silos. There may be hurdles around how to handle external data sources now - however, the best teams will overcome these to build better, real world relationships with customers.

What challenges will the data infrastructure industry have to face this year?

There’s a move to cloud taking place that will affect the wider data infrastructure market. Public cloud services can provide the right security and compliance support for banks today, so they are making more of these new options.

The challenge will become how to make the best use of these new options to support the “right-now economy” and the real-time customer expectations that are more common today. Using public cloud as a platform is only part of the story, as there are other considerations around the availability of skills and how to harden these platforms so that they can stand up to production. Bank IT has to be rock solid and reliable - it can’t fall over or be unavailable for any reason when you are dealing with online services or payments. Supporting these new applications and keeping them available is a key consideration for all companies, including DataStax.

There are also the major application providers who need to work out how they move their applications to the cloud in order to react to rapidly changing market demands.  Many of these applications will require re-architecting, re-development and re-implementation; can additional business benefits be realised whilst making these infrastructure changes?

Many sceptics (myself included) think that blockchain decentralisation can never be fully guaranteed, so the tech is simply a faster yet glorified Oracle database. From someone who builds, runs and dreams up new databases, is this fair? Are distributed ledgers the beginning of a new type of database?

Blockchain is a useful technology - however, creating a public distributed ledger is a specific use case. For internal applications, other databases can meet the need to distribute data over multiple locations for redundancy and resiliency, and they don’t have the energy or performance overheads that blockchain currently has. It’s a question of picking the right information architecture for the right use case.

In 2018 where might we see the greatest innovation in data infrastructure in the financial industry?

I think we’ll see a lot more use of artificial intelligence and big data within banking. Delivering voice-based services is one thing, but how can the service spot trends in your customer behaviour and then deliver that back to you? This kind of real time interaction has to be based on real world data, being interrogated and recommendations made in real time. Voice assistants are a great channel for delivering that insight to people in the moment, but it has to be powered by the bank’s back-end infrastructure. That second wave of services, that move beyond simple balance checking or information requests, will be the highlights for the coming year.

The various start-ups we’ve spoken to that pioneer the use of blockchain suggest they need the tech giants to step in and build infrastructure. How much will the likes of IBM and DataStax pave the way to  ‘revolution’?

Infrastructure and support are necessary for banks to make the most of new technology options, but this investment has to be linked to an understanding of how customers will get value out of what you deliver. This value will be based on how the bank can help customers use their data, or combine that customer data with other sources to benefit themselves.

These insights will help power better experiences for the customer in the moment. We are still at the start of building this infrastructure to help banks be ‘revolutionary.’

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