Originally published in Financial IT
In today’s uncertain economic climate, many businesses are loath to make significant decisions before the UK government solidifies a Brexit plan. As a result, many organisations are playing a waiting game. While this might be financially prudent, businesses still need to operate as usual and a crucial part of this is ensuring they have the right technology estate in place to support their staff, operations and customer interactions.
But financial institutions cannot afford to stand still when it comes to technology. Just remaining compliant can require significant IT investment — the IT budget is consumed before any discussions about using it to enable business growth have even started. While these organisations must be transparent about the types of data they store, they also need to keep it secure. The data needs to be protected and it all has to be stored and managed on resilient hardware platforms. As a result, many financial businesses can find that their entire IT budget is taken up in achieving this.
But, technology is also a tool for change and one that is in the driving seat in the area of digital transformation. Certainly, consumers are expecting more from their bank branches. Samsung describes branches of the future as immersive, advice-driven financial centres that give customers what they can’t access on their own. These centres will incorporate existing technologies such as smartphones, tablets, self-serve kiosks and wearables, as well as newer technologies such as virtual reality and virtual desktop infrastructure.
Also, many banks and other financial institutions have legacy-based infrastructures which do not always align well with these new platforms and technologies. Failure to invest in the right IT systems can lead to a mix-and-match approach when it comes to technology and as a result, organisations can become unwieldy and more prone to attack.
Understandably, the uncertainties around Brexit are not helping businesses to feel secure about embarking on large technology investments. So how can they meet their regulatory and security obligations while satisfying customers, remaining competitive and mitigating potential risks to the bottom line?
A subscription model is one way to ease the burden of an upfront investment — it can balance the investment by relieving the burden on capex while delivering on the business’s objectives. This then frees up the business from the burden of choice over technology to improve compliance or technology to meet consumer demand. Many financial institutions will be used to this type of model as they provide the funding for large purchases such as cars and furniture.
Like cars, technology needs to be managed effectively during its lifecycle. So, it can make sense to finance it in the same way. This streamlines the payment process and protects institutions from unpredictable and large financial outlay. Although not in the financial sector, one recent example of an unpredictable investment is the cost of technology required to safeguard Gatwick Airport from drone activity. This is likely to require substantial investment, a cost which won’t have been budgeted for.
For financial institutions, the situation may not be so dramatic, but the cost of replacing faulty servers which were not budgeted for could be equally as devastating to cash flow. Using a subscription as-a-service model and partnering with the right technology provider can enable organisations to manage assets and replace them under warranty as required, as well as having the ability to add in any unpredictable technology requirements. In addition to streamlining the payment costs, this model protects capex and has the added benefit of saving costs associated with keeping the technology estate current and operational.
Often, replacing, upgrading or installing new technology assets can be time-consuming, challenging and costly. The main concerns being data privacy and security, a lack of budget and resources, and the absence of the right in-house skills and expertise. In such a rapidly changing financial industry, these challenges are more keenly felt. Finding a trusted technology partner and using a subscription as-a-service funding model can go a long way in overcoming these challenges and assisting institutions to achieve compliance and transformation while satisfying consumer needs and remaining competitive.