Published on in Financial ServicesDigital Transformation

Today more than ever, financial services is a dynamic, rapidly changing and above all increasingly competitive sector.

Operating in this industry is a challenge – and, for the most part, it’s one that banks and insurers have managed to face.

However, the changes that have been taking place of late appear to be far more radical than what has gone before.

The traditional titans of the industry are starting to look over their shoulder, due to the rise of challenger banks and insurers, who have been aided by new technologies and the changing shape of regulation.

As smaller – and therefore more agile – players emerge, they threaten to cut out the traditional incumbents from their place in the consumer chain.

Taking advantage of their size and agility, and the absence of outdated legacy systems weighing them down, these newer players have the chance to significantly shape the market as it is today – offering consumers enticing digitised solutions and displacing established players in the process.

And it’s happening quickly, with no sign of slowing down.

A report from consultancy firm EY found that global rate of digitally active consumers adopting fintech has risen on average from 16% in 2015 to 33% in 2017.

The implications are complex and varied but the bottom line is that ‘traditional’ FS players must keep pace or risk becoming obsolete.

Operational efficiency gains

There’s no simple solution, nor is there a one-size-fits-all approach when it comes to taking proactive steps to catch up.

That said, there’s little doubt that if the existing market is to drive profitable growth and remain competitive, operational efficiency must be placed at a premium.

Why? Put simply, overhauling infrastructure requires time – not to mention investment. And it’s time and money that these organisations don’t have to spare.

Instead, the focus should fall on doing more with less, in order to benefit from immediate gains.

Taking a hybrid IT approach

A valuable weapon in any organisation’s armoury is, therefore, a hybrid IT solution.

Since sluggish heritage IT systems can be a significant thorn in the side of larger organisations, replacing them is often a long-term goal. But unfortunately, replacing them can be a complex and drawn-out process.

An alternative, more efficient, means to achieving these goals is a hybrid solution.

Hybrid IT can help to reduce the running costs and improve the agility of heritage systems by moving them onto a cloud-based infrastructure solution.

This reduces the processing of workload and means that, because they are being run in the cloud, they can easily be scaled up or down in response to customer demand – rather than wasting cost and resource running a system which is not being fully optimised.

In practice

So in reality, what could a hybrid IT solution look like when applied within a financial services organisation?

To give an example, in Japan we have worked with five banks to deploy a hybrid service which connects their core platform into a wider ecosystem of fintech companies providing mobile banking solutions to consumers.

Fujitsu provides and manages the connectivity between the banking systems and the mobile app solution, delivering a number of integrated services across the ecosystem.

How does this benefit the banks?

Well, it means they have been able to increase their customer base and market penetration without the need to develop costly new solutions or to expand their current system.

While for the fintech companies this provides them with access to regulated core banking solutions and a large existing marketplace of customers for their new service. In short, it’s a win-win!

To find out more about how a hybrid IT solution could help your business, visit the Hybrid IT web page.

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