Digital Transformation Service Assurance Challenges and Solutions for the Financial Services Industry
The evolving 21st century digital economy presents unprecedented challenges and opportunities for all businesses but perhaps none more so than the financial services sector. Digital Darwinism will be unkind to those banks, brokerages, and financial service firms that don’t embrace data-driven business models, customer experience and operational processes. Indeed, businesses in the financial services sector must build for agility and speed like never before and harness the vast amount of data that must be tracked and controlled.
A few of the digital disruption challenges facing the industry include advanced computing and analytics, omni-channel service delivery, complying with government mandates and blockchaining. Due to its promise of speeding up transactions and cutting costs while simultaneously minimizing the constant risk of fraud, blockchaining is one noteworthy digital disruption that has emerged as a secure and transparent way to digitally track assets for the financial services industry. Currently, more than 40 top financial companies are experimenting with such distributed ledger technology, and blockchaining alone, experts predict, will cause a massive upheaval as it is, “game-changing technology.”1 While there are many such forces afoot influencing the industry, the fundamental question with all these digitally disruptive forces is, how can financial institutions use new technology platforms to reinvent their businesses while re-aligning their infrastructure model with the Digital Age paradigm?
The Digital Age Paradigm
Every new breakthrough or evolution in the Digital Age is accompanied by upheaval and Digital Transformation (DX) is no exception. DX is not only the new evolution of technology that encompasses business processes, but it is also a new paradigm that will not only be evolutionary but revolutionary. The Digital Age is here, but its ascendancy is not only technological, it’s also customer-centric with the customer having more sway than ever before. Indeed, no less than well-respected analyst Forrester says the Digital Age is the “Age of the Customer.” In truth, DX is not only about creating value via enhanced digital processes for financial institutions, but to create ongoing value for the customer.
IDC calls this transformation the “DX economy” while another leading analyst group says it is the rise of the “algorithmic business” and the “programmable economy.” Furthermore, Forbes predicts that by 2018, 35 percent of IT resources will be spent to support the creation of digital revenue streams, and by 2020 almost 50 percent of all IT budgets will be tied to DX initiatives.
The economic impact as well will be staggering – and profound. DX is encompassing virtually all foundational technologies including mobility, Web 3.0, Unified Communications (UC), Big Data but also IaaS and PaaS/SaaS. According to Datameer, Financial services firms are turning to big data technologies to improve their customer intelligence, reduce risk and maintain regulatory compliance, identify fraud patterns and trading activity, and to more precisely target their marketing campaigns.2 While financial service organizations are perplexed as how to best utilize the Internet of Things (IoT), it, too, will potentially impact ATM and mobility banking.
Fueled by the insurgency and overarching paradigm of DX and its attendant wave of digital disruption, the financial industry is transforming in unexpected ways with new business models and technologies. As a consequence, the industry will need intriguing digital brands, innovative payment systems, frictionless trading, consolidated marketplace lending – all while navigating the disruptive trends of collaborative ecosystems, cryptocurrencies and artificial intelligence machine learning. Of these trends, mobile banking may be equally as disruptive, bringing with it challenges but also unprecedented opportunities for enhanced and collaborative customer experience like never before. All of these elements will coalesce – and that will forever influence the future of banking. These disruptive technologies have altered the way businesses and people live and work, creating new opportunities – but there is a dark side.
In order to stay on the cutting edge of the DX archetype that is fundamentally changing the daily activities of all businesses, financial service organizations must adopt – and ensure – the evolution of its enterprise architecture. And that consequent and unrelenting need for service assurance may be its stiffest challenge.
The Challenge of DX to the Financial Industry
Like all industries, the financial services sector is undergoing dramatic change due to the digitization of its business. Changing customer behavior and demands are leaving their imprint, too. The financial industry as a whole has a reputation of being conservative and slow to innovate as well, but not now. Based on a global survey of more than 200 financial service executives, sales, marketing and customer-facing goals within their organizations mandate the rapid adoption of DX.3 Moreover, customer experience is a major driver for the industry.4
The immediacy of data is seen by industry executives as strategically vital while customer experience is “the center of all decision-making.”5 Providing high-quality customer experience across the mobile touch points is seen as essential as well. Delays in service are simply not tolerated by consumers and institutions are realizing this, too. According to Forrester, digital channels were identified as the key to customer experience with improving the online and cross-channel customer experience dwarfing other customer-centric actions taken by financial institutions.
As part of the DX journey, IT teams must face a vast array of challenges in their efforts to compete in a digital economy including, but not limited to, IT silos and lack of collaboration, service performance degradation, poor insights, inadequate visibility and cybersecurity breaches.
Financial services companies depend on IT delivering real-time actionable insight into the connections between stakeholders, data, and processes so as to provide service delivery and stellar customer experience. In addition, customer expectations have changed with the ever-evolving digital technology swirling around us. The fast-food consumer standard set by NetFlix, iTunes and other digital service processes has engendered an expectation mentality in consumers mind – they want all services delivered quickly and with a flawless user experience. Financial service organizations must integrate web, mobile, phone and in-person service like never before – or patrons will go elsewhere.
A greater reliance of all things digital will bring its own unique challenges to the financial services industry. Just with governance, risk and compliance (GRC) alone, Forbes believes that by 2017 the typical IT organization will spend up to 30 percent of its budget on GRC and security while allocating 10 percent of IT staff to these initiatives.6
The practical issues facing the industry are the deep penetration and acceptance of web-based services and mobile devices such as smartphones, tablets, wearables and e-readers that have set expectations for rapid innovation and compartmentalized digital financial services offerings. Deutsche Bank Research confirms this saying, “For digital consumers, ‘traditional banking hours’ [and services] are not only an annoyance, but increasingly a reason to change financial institutions.7
Day-to-Day, Practical Challenges Facing the Industry
The digital disruptions – and demands – brought upon network infrastructures whether with Big Data analytics, SDN/NFV, cloud, VDI, data center virtualization and BYOD are bedeviling organizations like never before. Plus, the 24/7/365 availability of mobile applications, SMS alerts, real-time secure transactions, both online and offline – all underscore the desire of consumers to have a seamless, omni-channel customer experience. Continuity of service is foundational to financial institutions, and even more so with DX mandates as infrastructure breaches and problems are inevitable.
The essential goal of DX is to provide agility that will improve operational processes, customer experience – all while reducing costs within a tightly controlled regulatory framework. Thus, service assurance directly correlates to customer experience. Outages simply cannot happen and if they do they must be brief. Indeed, the main threat vector to the industry are the demands made upon the network infrastructure, thus the need for service assurance has never been more vital. According to one researcher, the typical hourly cost of downtime to brokerage services – just one element of the financial sector – is $6.48 million.8 The aggregate costs of time spent in the war room, mean time to knowledge (MTTK) and mean time to repair (MTTR) all filter down to diminished end-user experience. Service performance and availability are indisputably the most critical metrics to the financial services industry.
Assuring service delivery today and tomorrow at any scale requires continuous monitoring and real-time analysis so as to quickly diagnose service delivery issues – of any kind.
The Service Assurance Solution for Financial Service Organizations’ DX Journey
Successful financial services outcomes depend on the uninterrupted and secure flow of information. To assure this happens requires data-driven, actionable intelligence and end-to-end operational visibility of the entire IT infrastructure. That’s why financial services organizations turn to NETSCOUT for ways to collect, organize, analyze, and visualize data critical for business assurance. Businesses depend on IT teams to deliver real-time actionable insight so they can optimize agility, assure service delivery, mitigate risk, and provide a feedback loop to operations, development, and business functions. But to make all this happen, they need smart data that is based on network traffic at the core and complementary sources such as NetFlow, synthetic transactions and log files. Smart data leads to smart service performance and cybersecurity decisions.
Through NETSCOUT’s patented Adaptive Service IntelligenceTM (ASI) next generation technology, which delivers comprehensive real-time, actionable intelligence of the IT infrastructure environment’s interrelationships and dependencies, any performance degradations in the physical, virtual or hybrid service delivery infrastructure are quickly identified. This metadata is visualized through the nGeniusONE® Service Assurance platform service dashboards, which empower IT departments to gain situational awareness across all business services. With capital market services alone it is a godsend as it allows for the monitoring of trades by:
- IP Hosts – trader or SenderCompID
- Trading Venues – trading application or Target CompID
- Market Data Feed (MDF) channels
Transaction processing delivery problems coursing through network infrastructure, whether from branch offices, to ATMs, cloud services or a financial service company’s global WAN, are quickly triaged. NETSCOUT helps with the 24/7/365 availability of business services such as e-banking initiatives, investment services, branch automation services and back-end accounting systems. Moreover, IT teams use NETSCOUT’s nGeniusONE platform to facilitate business agility, scalability and risk mitigation.
What are the Benefits?
What are the specific benefits and advantages financial services can glean through using such a comprehensive service performance monitoring solution? The NETSCOUT nGeniusONE platform has been rated as “Best in Class” by surveyed customers for service assurance for cloud, virtualization and IoT environments. Customers assert they are able to glean tremendous benefits through using smarter data and superior analytics as provided by the nGeniusONE solution. The NETSCOUT nGeniusONE Service Assurance solution provides unparalleled service triage capability to IT network professionals by proactively detecting in real-time service performance problems, which in turn dramatically reduces time spent in the war room, mean time to knowledge (MTTK) and mean time to repair (MTTR). The end result is not only improved customer experience, but vastly improved CAPEX.
NETSCOUT Helps Lincoln National Corp. and Fidelity Investments Reduce MTTR and MTTK
With business operations spanning the globe and over 20,000 clients, Fidelity Investments offers a full array of wealth management, brokerage services and other investment-advice services. Its IT infrastructure is massive with its web services alone tallying an impressive 21 million unique visitors per month. Most importantly, its client-facing technology services must be available 24/7/365 a year. If such demands weren’t enough, Fidelity must provide reliable up-to-the-minute pricing and commensurate financial data. Regulatory requirements, such as Sarbanes-Oxley, as well exert their constant gravitational pull upon the company.
Technical malfunctions simply can’t happen – not just from a practical, business standpoint but from a corporate brand and reputation viewpoint as well. Unresolved network IT issues trickle down to the client eventually and can result in the loss of millions but also a diminished business reputation. What have been the results Fidelity Investments has seen by using NETSCOUT solutions? They’ve slashed MTTR by 80 percent and time spent in the war room by 50-75 percent. Says Ernie Yumul, a network engineer at Fidelity, “NETSCOUT is one product you can rely on with its analytics and packet capture capabilities.”
The results derived by Fidelity Investments are not atypical. Other financial services organizations have also derived tremendous benefit using NETSCOUT nGeniusONE. Lincoln National Corporation reduced their MTTR by an astonishing 95 percent or greater with NETSCOUT solutions. (To read the complete Fidelity Investments use case, go here for more information.) Also, credit card services giant Visa improved service performance by enhancing IT infrastructure visibility.
According to one researcher, “By its definition, [DX] is operational.9 It’s not purely the use of technology; it’s the operational fulfillment of business transactions.” And directly related to the fulfillment of those transactions is the customer experience. Therefore, service assurance has never been more vital. The mass digitization of all industries has fundamentally changed the relationship between companies and their customers. In the financial services sector, this is even more true as established brands must ensure their banking services are seamless, secure, compliant with governmental regulations and personalized among all service channels – most notably the mobile channel.
In the digital economy, velocity creates chaos and risk everywhere. The challenge will be managing complexity that innovative DX technologies and accelerators bring with them, scaling to meet the flood of traffic volume, and making decisions at the speed of business. DX is profoundly changing the behavior and expectations of financial services customers – clearly the ecosystem has changed due to digital disruption. Efficiency and effectiveness of service processes and information technology are therefore essential.
To meet these challenges, the NETSCOUT nGeniusONE Service Assurance platform organizes network traffic and correlates it with secondary data sources to generate coherent, precise, and contextual metadata. And these solutions scale, to continuously convert large volumes of data at high velocity for real-time actionable insights. By providing unimpeachable service assurance solutions, satisfactory customer experience and growing margins are a reality with NETSCOUT.
- 1 https://www2.deloitte.com/us/en/pages/financial-services/articles/investment-management-industry-outlook.html
- 8Mitch Wein, VP of research and consulting at Novarica.