25th October 2017

vSphere Banking and Digital Transformation

VMware have been presenting at Money 20/20 this past week, where they made a few announcements.

A VMware commissioned survey of banking professionals, exploring how technology will shape the future of the banking industry, led to the following results;

“The banking sector is laying the foundation for the digitization of their businesses and anticipate emerging technologies – from IoT to biometric authentications and blockchain – to make a substantial impact on the industry within five years”

Technology Future

With technology so pervasive within all walks of life, the banking sector must move with and even better get ahead of the times. Technologies such as blockchain and biometric authentication have some obvious applications within the sector.

When considering that a bank is dealing with large sets of structured and unstructured data in an always on constantly updating operating environment, other evolving technologies such as machine learning and artificial intelligence will also make an impact. Through call centre AI, improved fraud detection, compliance checking and operating efficiency improvements.

Like any organisation that deals with large data sets, critical infrastructure and highly regulated, secure computing environments. The advances to the vSphere SDDC stack will be of equal importance than the emerging technologies discussed above.

The ability to implement micro segmentation with NSX, will alone be worth the cost of the licence fees for some. Add into that the new technology of AppDefence, which I expect to be adopted across the banking sector, to the existing mature vSphere SDDC stack and there is a near perfect infrastructure upon which to host a bank.

Certainly, VMware, Temenos and Bank Leumi believe this to be the case. With their collaboration announced at Money 20/20, to create an advanced digital banking platform for banks worldwide. Based upon the platform originally developed for Pepper, Bank Leumi’s fully-mobile bank. The new platform combines Pepper’s product base with the Temenos’ core banking platform. Deployed on VMware’s cloud infrastructure, either in an on premises or public cloud model.

Whilst talking about existing technology, AI and machine learning isn’t nearly as sexy as discussing the impact of crypto currency technologies, it is perhaps where the bigger modernisation and savings are to be made.

Technology Reality

The banking sector in my experience is with good reason risk averse. What that means in general is that banks don’t tend to run on bleeding edge infrastructures, unless there is a compelling reason for them to be implemented, compliance or regulation perhaps. Updating or modernising banking systems comes with risk, without a compelling reason or vision why take that risk?

Meaning that there are many banks running on legacy, monolithic systems. Industry talk of incorporating new technologies into these estates is premature. These are infrastructures that need stabilising, to provide banking teams with the time required to re-architect away from the monolithic and legacy.

Challenger banks, should have been born and developed in the cloud, so they should be ahead of this curve already. Established larger banks, should have the resources to be ahead of the curve or engage in rapid transformation if required. Established smaller banks, find themselves built in the pre-cloud era so running legacy systems but perhaps without the resources to invest in rapid transformation.

The capabilities provided by the vSphere SDDC stack, will enable these established smaller banks to stabilise current systems and provide the organisations more time to re-architect environments and plot a path ready for digital transformation.

Thanks

Simon