We take a look at some of the engineering trends emerging in the financial services sector.
Cheque books are a foreign concept to many these days, a relic of bygone banking swept aside for safer, secure and more efficient methods of payment delivered by advances in technology. Most banks suggest that fewer than 1% of their customer base use cheque books, with many phasing out the usage of paper transactions in the near future.
As digital banking and digital engagement with financial institutions continue to grow, and reliance on convenient transactions is increasing, with that financial services organisations must keep up with technology that provides its customers with the best possible experience.
With transactional data available in an instant at your fingertips, and apps that have gamified the nuts and bolts of engagement, more and more information needs to be stored safely and securely.
With the traditional methods of in-branch or person-to-person engagement being replaced by self-service, software engineers are in huge demand from a sector undergoing significant transformation.
Investment in software engineers will not only be required to meet the current demands of replacing or upgrading legacy core systems, but also to future-proof services and provide the technical know-how that could offer a competitive advantage in the market.
Data and event streaming
By leveraging event driven architecture, financial service organisations are able to embrace digital transformation and meet the needs of their customers, while enhancing their competitive edge. A simple way to look at event driven architecture and event stream processing is by the motion of data. Organisations typically rely on batch processing using static data, for example with payroll. The flip side of batch processing is event stream processing which uses data that is in motion, i.e it’s always moving and regularly updated. You could say these two sit alongside each other, but event driven architecture and streaming is becoming more common as the need for sharing real time data becomes the norm. Event data provides immediate insights, for example, with credit card applications moving from pre-approved to approved. With rapidly increasing transaction volumes, event streaming takes a load off legacy systems and provides insights in seconds.
Increasing technical competency key when banking on data
The flow of data in any business is crucial to its operation, and provides customers and analysts with intelligence that can help make better decisions. Enabling this flow of data within financial service organisations, such as banks, relies on a complex set of interactions between systems and skilled software engineers are needed to make this happen.
The transformation within the industry highlights the technical competency changes taking place, with banks and other financial service organisations creating sophisticated software akin to any leading tech company. The same can be said in many other industries. Take VW for example. Recently the car giant announced it would be transforming the way it manufactures and announced plans for the future with a focus on creating jobs in the Technical Development team. The team will work to create connected architecture and software for its future products. They plan to hire more than 10,000 engineers to make this a reality.
Open banking, driven by the industry and/or regulation, is gaining traction as more banks look to open up their APIs to allow third parties access to data. It should be noted that the practice of sharing financial data is secure, electronic and only under conditions approved by the customer. Open banking is a great way for innovative organisations to create new offerings and products through apps leveraging data from banks and other financial institutions. The most important component for software engineers is protecting the core banking or investment system and enabling the event driven architecture to present streams of data for advanced analytics platforms and dashboards. As sharing of data becomes more widely practised, engineers will need to adapt and design new technology that keeps up with the needs of both the business, the customer and the data consumers.
Automation to remove risk
Only a few years back, one of the most common issues for banks and other financial service organisations was reliance on older core systems that have been stacked and layered with new technology, putting pressure on legacy systems. This was the most common cause for outages and would impact not only their customers, but reputation, operations and profitability.
A more common practice starting to take shape in financial institutions is the automation of software engineering using a process called CI/CD (Continuous Integration / Continuous Delivery). If you can imagine the number 8 on its side, you’ll essentially see a flow figure that follows a process of continuous integration with continuous deployment. Almost like refueling a plane in mid-air. The use of CI/CD is driven by the need to reduce risk when making changes to critical systems, which has often caused outages. Organisations are now moving past the easy areas to automate that are already in the cloud, and are looking at how they can automate across legacy technology stacks to reduce the risk of outages following changes.
Legacy and technical debt
The consumption of data and the need to be more agile, is driving a number of changes within the financial services sector. This demand places increasing pressure on legacy systems being exposed to load that they were not designed for. With event driven architecture making changes in real time (for example a loan being pre-approved to approved), the technical and legacy debt is high. Batch processing is another great example of immense pressure being placed on systems – with huge amounts of data (end of week payroll is one example) pushed through alongside other transactional activity.
Engineers are now well positioned to transform systems in order to supply clean and easily consumable data for both short term and future needs. By decoupling legacy systems, financial institutions are able to move at pace, be more agile and meet the digital requirements of their staff and customers. For financial services, this is a strategic play that will benefit the long term needs of the business.
Overall, financial institutions are leveraging the benefits of engineering solutions to better meet customer and business needs. We help organisations leverage technology solutions and platforms that enhance ways of working and customer satisfaction. ClearPoint has over a decade of experience working with banking, investment management, wealth and insurance organisations and we can help you meet strategic, design and implementation goals. Find out more about our financial services experience here.