Last week has been a stark reminder of the IT problems that plague the financial services and banking sector with customers locked out of accounts and unable to make and receive payments. John Rakowski, solutions evangelist at AppDynamics examines the problems and looks to the solutions
Firstly, millions of Nationwide customers were unable to access their accounts on Monday 15 June after a glitch during a planned IT upgrade caused current accounts to apparently disappear. Further still, two days later, RBS suffered a major glitch that affected 600,000 payments, which in some cases left customers unable to receive their wages or pay their bills. From once glance on Twitter, it was clear that banking customers had had enough, with many of them vowing to change to alternative providers.
As most established banks have built their technology systems up for years through a number of mergers and acquisitions, they have been left with fragmented systems that serve as a ticking time bomb for customers. Although banks have been reluctant to update these legacy systems due to the high costs and risks involved, a failure to introduce the latest tools and systems will ultimately mean a loss of customers and revenue. This will of course take a vast amount of investment.
Nationwide recently invested $2bn to overhaul its systems, and clearly still has some way to go. However, with new, more flexible entrants to the market such as Atom bank and Renault challenging for market share, the pressure to innovate for today’s consumers is more important than ever.
To succeed, banks need to understand that account holders no longer distinguish between online and offline worlds and expect all experiences to be seamless. As mobile applications and online banking are often the primary channel that consumers use, banks need to prove to customers that their online services are up to scratch. But how do CIOs deliver innovation while maintaining a high level of customer service?
What is holding them back?
Accenture surveyed 25 senior banking executives from across European banking organisations – three quarters of respondents felt their banks have a "fragmented or opportunistic" approach to dealing with digital innovation. Furthermore, the report details that 40% think the time it takes their organisation to deploy new technology is too slow. This is noted as negatively impacting organisations’ ability to realise value. The majority are reported to believe that the banks lack the "skills and culture needed to succeed in the digital age". This state of play is contributing to the rise of challenger banks across Europe.
The rise of the software-defined bank puts a renewed focus on innovation; however, one of the main pressures on banks today is the increasingly high standards of performance and reliability that consumers demand from their mobile apps. Given growing competition in the retail banking sector, online banking services must meet the highest standards of performance and reliability, regardless of time, location or device. Additionally a great mobile banking service must also provide a far greater range of services than traditional banking, all in the context of customer. To achieve this, banks must ensure customers have 24/7 access to key services, whether it be through proactively predicting when their applications will experience surges in traffic or spotting and fixing emerging glitches in real-time, before they impact experience.
Although it could be argued that technology problems of some kind will always occur, organisations must ensure they have end-to-end visibility of their digital transactions in order to identify and repair performance glitches as quickly as possible. Without this, banks are often looking for a needle in a haystack. For example, RBS took over two days to solve the banking problem which is far too long for out-of-pocket customers. With the correct application performance monitoring and analytics solutions in place, banks can spot the root cause of problems much more rapidly, minimising the level of damage done.
Apps are important
Crucially, CIOs will also need to think more about the performance of their applications and the experience they provide if they are to remain relevant. Application Intelligence and performance monitoring solutions will be even more necessary if other organisations are to follow suit. IT departments need to look at where the most value can be added in innovating financial services IT. As customers expect the ability to manage their accounts online at all times, many banking applications are not providing the performance – or even the services they need, in order to remain competitive.
The solution for the software defined bank
Providing perfectly-performing mobile services that can deal with millions of transactions a day relies on complex, distributed applications working seamlessly. It’s made harder still by the added complexity that comes from managing the mix of the requisite software, hardware, cloud services, app developers, third party web services and so forth. All this, piled on top of the antiquated legacy IT systems that many traditional banks have accumulated, makes for a high risk situation that neither challenger nor traditional banks can afford.
Software defined banks with highly complex IT architectures need to employ sophisticated analytics and monitoring applications to help mitigate the risks mentioned above. APM (Application Performance Management) solutions give online financial services certainty about the operation of their business, IT infrastructure and applications in real-time, and enable them rapidly respond to, or even predict, issues that may arise.
The digital-only Atom Bank might just be what Britain needs, so perfect performance will be imperative in a software-defined age where digital dispensation is never given on loan.
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