Technology Trends in the Financial Service Industry

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Technology Trends in the Financial Service Industry

  1. 1. Technology Trends in theFinancial Service Industry yLarry RyanJune 22nd, 2012J dChief Technologist, Financial Service Industry© Copyright 2012 Hewlett-Packard Development Company, L.P.The information contained herein is subject to change without notice.
  2. 2. Increasing Pressure on Financial Firms Financial System Soundness: Capital, quality, liquidity, & risk Increasing regulatory pressure: greater levels of transparency Sophisticated b S hi ti t d cyber attacks: tt k secure infrastructure, data & apps Customer experience: agility to retain and grow market share Shareholder Demand: cost control & operational efficiency2 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  3. 3. Increasing Pressure on Financial Firms Top Bank Efficiency Raio and ROE Financial System Soundness: 100 Capital, quality, liquidity, & risk 80 Increasing regulatory pressure: greater levels of transparency 60 Sophisticated b S hi ti t d cyber attacks: tt k 40 secure infrastructure, data & apps 20 Customer experience: agility to retain and grow market 0 share ‐20 Shareholder Demand: cost control & operational efficiency Efficiency Ratio ROE Source: www.bankregdata.com (2011Q4 Data)3 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  4. 4. Technologies Impacting Financial Services Focus on customer experience and agility to retain and grow market share Cloud • Market place for Shared agile services Shareholder Demand for cost and operational efficiency Security • Pervasive and end-to-end Increasing regulatory scrutiny requires greater levels of transparency Big Data • Derive meaning from the digital world Sophisticated cyber attacks require Social Media stronger secure infrastructure • Th di it l culture The digital lt • Anywhere computing: markets, apps, Improve soundness by increasing capital and i it l d improving li idit i liquidity Mobility payments4 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  5. 5. The Digital Life2020 4B people online, 31B connected d i2020: l li t d devices, 25M apps Consumer CHANNEL SERVICES CHANNELS USER SECURITY SERVICES (SSO, Authorization and Access Control) CHANNEL INTEGRATION Professional SERVICE SECURITY (Authentication, Authorization and Access Control) BUSINESS SERVICES CORE BANKING OPERATIONS WEALTH CORPORATE MANAGEMENT INFORMATION EXTERNAL ENTERPRISE MANAGEMENT & INTERFACES SYSTEMS RETAIL TRADING DATA SERVICES RISK MANAGEMENT TREASURY & CASH & COMPLIANCE MANAGEMENT PLATFORM SECURITY (Authentication, Authorization and Access Control) PLATFORMS INFRASTUCTURE SECURITY SERVICE SECURITY (Authentication, Authorisation and Access Control) IT INFRASTRUCURE HYBRID DELIVERY CLOUD Mobile Datacenter5 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. Source: IDC, ICT Outlook: Recovering Into a New World, #DR2010 GS2 JG, March 2010
  6. 6. The Digital Life: Data2020 4B people online, 31B connected d i2020: l li t d devices, 25M apps Transactions Social Interactions Payments Personal Photos Exhaust Data Movies/Videos Maps Music M i Location L ti Books Scientific Data Magazines Life Footprint Consumer Professional CHANNEL SERVICES Newspapers Biological CHANNELS USER SECURITY SERVICES (SSO, Authorization and Access Control) CHANNEL INTEGRATION SERVICE SECURITY (Authentication, Authorization and Access Control) BUSINESS SERVICES CORE BANKING OPERATIONS WEALTH CORPORATE MANAGEMENT INFORMATION EXTERNAL ENTERPRISE MANAGEMENT & INTERFACES SYSTEMS RETAIL TRADING DATA SERVICES Art Environmental RISK MANAGEMENT TREASURY & CASH & COMPLIANCE MANAGEMENT PLATFORM SECURITY (Authentication, Authorization and Access Control) PLATFORMS INFRASTUCTURE SECURITY SERVICE SECURITY (Authentication, Authorisation and Access Control) IT INFRASTRUCURE Public Records HYBRID DELIVERY CLOUD Mobile Datacenter6 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. Source: IDC, ICT Outlook: Recovering Into a New World, #DR2010 GS2 JG, March 2010
  7. 7. Cloud© Copyright 2012 Hewlett-Packard Development Company, L.P.The information contained herein is subject to change without notice.
  8. 8. Cloud computing types for financial service firms Core Attributes Elastic Pay-per- Pay-per-use Banker Networked Shared On- On-demand Trusted external service providers Markets/Communities / Software Services (SaaS) (SaaS) Platform Services (PaaS) (PaaS) Infrastructure Services (IaaS) (IaaS)8 How is it used? © Copyright 2012 Hewlett-Packard Development Company, L.P. What is delivered? The information contained herein is subject to change without notice.
  9. 9. The Financial Service Marketplace evolves NASDAQ Market Replay Expanding into cloud services Attacking legacy business models b i d l 9 © Copyright 2012 Hewlett-Packard Development Company, L.P.Legacy Services The information contained herein is subject to change without notice. “Cloud” Services
  10. 10. Value of Cloud in FSI Top Challenges Faced by Banks h ll db k Manage Recovery Grow Customer Base Handle host of New & Changed Regulations Absorb Acquisitions Three Key Drivers for Cloud Adoption Cost Reduction Speed to Deliver Agility Ovverall cost reduction through – With technology innovation becoming more of Banks looking at Agility specifically with • SaaS - Avoidance of infrastructure cost an enabler of new banking products and reference to IaaS • PaaS - Quicker development cycles channel innovations as well as increased Large-tier banks &"megabanks" have extremely regulatory changes expected, a banks ability to large sets of data and very high transaction • IaaS - Increasing utilization of infrastructure components reducing total infrastructure needs quickly adapt to the changing landscape or volumes in solution areas that are load- overall become a market innovator by leveraging y g g intensive and read-intensive such as risk read intensive, technology is a distinct competitive advantage management, trading algorithms, pricing, Enable banks to increase control over IT infrastructure with regard to fixed vs. variable Cloud computing can offer faster initial quantitative analysis and payments processing costs and opex vs. capex implementations by eliminating the need for Megabanks are adopting or considering private lengthy hardware acquisition cycles or capital cloud (internal to bank) IaaS to reduce overall Flexibility and control over costs to react to what investment project reviews infrastructure cost through consolidation of is becoming an increasingly volatile economic condition diti servers, servers data centers and higher utilization of their server footprint Source: Market Insight: The Impact of Cloud Computing on Vendors in Banking – Gartner June 201010 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  11. 11. HP Converged Cloud Portfolio CONSUMEBUILD, MANAGE & Off-premise servicesSECURE INFORMATION Managed Cloud APPLICATIONS(across all models) INFRASTRUCTURE • Enterprise Cloud Services• CloudSystem • IT Performance Suite Services• IT Performance Suite • A t Autonomy Protect & P P t t Promote t Traditional Public Services• Converged Infrastructure Private Cloud Managed Cloud Cloud Public Cloud • HP Cloud Services PROFESSIONAL SERVICES Consulting & implementation Financing Education1111 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  12. 12. HP banking service centerSServicing multiple b k i S it i i lti l banks in Switzerland l d Bern Banking Service Center•Core banking services Large Locations•Single application instance Liebefeld Office Medium Space Locations WAN•Service delivery model•Usage-based pricing Small Data Locations Center•Consistent compliance Public Internet•Innovative product design tool External Gateways Bulgaria Bank Other Client Customers Networks HP Services•Transaction hub Network Second Data•Real-time multi-channel operations Center Data Slovakia Center Large•365x24 operations Locations Small HP Global Medium Locations Network Locations Operations Global Apps Center Capabilities12 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  13. 13. Global bank use caseDelivering a hybrid d liD li i h b id delivery cloud l d•DeliverIT as a service•Co-branded•HP designed, built, delivered, and operated•Engaged risk management, compliance,and security officers•Regulatory Compliance a key driver•Expandable service catalog and price list•Provision in hours as opposed to days13 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  14. 14. Key take-aways 1 Cloud is an emerging disruptive force; a strategic transformation and journey 2 Cloud decreases time to market, increases agility, reduces cost, and enables new business models 3 Assess what assets can move to cloud and start with an internal IaaS as a foundation towards a service ecosystem 4 HP recommends a hybrid delivery framework to integrate all sources and automate14 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  15. 15. Security© Copyright 2012 Hewlett-Packard Development Company, L.P.The information contained herein is subject to change without notice.
  16. 16. Top 5 Global Risks in Terms of Likelihood16 © Copyright 2012 Hewlett-Packard Development Company, L.P. Global Risks 2012 Seventh Edition, World Economic Forum, The information contained herein is subject to change without notice. http://www3.weforum.org/docs/WEF_GlobalRisks_Report_2012.pdf
  17. 17. The Threat•SWIFT: The operator of the world’s largest messagingnetwork for financial transactions said its communicationssystems are facing record levels of aggression from cyberhackers and attackers * attackers.•38% of financial services respondents say they havebeen hit by cyber crime of one sort or another. ** y y•Ponemon Institute found that >1 successfulattack/week/company (44% increase).*** * http://www.securitiestechnologymonitor.com/news/swift-terrorism-at-new-peak-shah-30120-1.html?zkPrintable=true17 © Copyright 2012 Hewlett-Packard Development Company, L.P. ** Cybercrime: protecting against the growing threat, Global Economic Crime Survey, Nov 2011, PWC. The information contained herein is subject to change without notice. *** Second Annual Cost of Cyber Crime Study, August 2011, Ponemon Institue.
  18. 18. Example Breaches Global Banks Community Bank Bank Outsourcer Exchange Payment Networks19 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  19. 19. HP’s Framework Embodies End-to-EndSSecurity it INFORMATION SECURITY MANAGEMENT Security Security Policy and Compliance Threat & Risk Security Training and Supplier Performance Risk and Audit HP Secure Boardroom Management Architecture Awareness Management Management SECURITY OPERATIONS Risk Accreditation & Identity and Security Monitoring and Universal Log Incident Assessment Acceptance Access HP ArcSight SIEM Change HP IT Performance Suite Alerting Management Management and Mitigation Testing Management Control DATA CENTER NETWORK APPLICATION END-POINT Data & Content Security Securing Data in Motion Securing Data in Use Securing Data at Rest HP Enterprise Secure Key Mgr Business Recovery & IDS/IPS Application Delivery Mobile Security Continuity Services HP Tipping Point Data C t S D t Center Security it Network Security N t kS it Application Security A li ti S it A t E d i tS it Asset, Endpoint Security HP Fortify Security Center21 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  20. 20. Key take-aways 1 Security and risk management alignment 2 Security and IT operations integration 3 Situational Awareness / Rapid response 4 Actively and Continuously monitor and evolve22 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  21. 21. Big Dataa sub-category ofInformation Management© Copyright 2012 Hewlett-Packard Development Company, L.P.The information contained herein is subject to change without notice.
  22. 22. Definition Social networkingUploading video In Germany Researching in in the US China Of the 6.9 billion people in the world, Chatting in India only 2.3 billion are online. Blogging in Brazil202025 million apps http://www.internetworldstats.com/stats.htm4 billion people online31 billion connected devices Speed450 billion online interactions, per day1.3 trillion tags/sensors Complexity50 t illi gigabytes of d t created trillion i b t f data t d 24 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  23. 23. Big Data valuable to Financial Services25 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. “Big Data: The next frontier for innovation, competition, and Productivity, McKinsey Global Institute, Presented at SIBOS, September 20, 2011
  24. 24. What are Banks doing? "Our top business•Track behaviour challenges are optimizing•Adjust risk exposure customer relationships, optimizing financial functions,•Correlate with transaction Reducing business risk and•Understand U d t d ensuring regulatory•Predict and influence compliance. Our prioritization is around our customer and then revenue / profits." – C Level Executive26 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  25. 25. Benefits for Banks•Customer behaviour•Multichannel Customer Interaction Multichannel•Product Innovation•Risk Management and Compliance•Strategy and brand marketing•Archiving & eDiscovery Archiving•Information Management27 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  26. 26. From Information to InsightMaking the most of structured and unstructured data gDATA: BIG, FAST, TOTAL• Big streams of rich data• Fast insight on data in motion (e.g., sensors)• Across Total relevant data sets Data D t Insights I i htINSIGHT @ SPEED OF BUSINESS sources & actions Next wave of analytics apps in connected world – high scalability, least energy29 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  27. 27. HP: THE NEXT GEN INFORMATION PLATFORM Transactional Data IT/OT Email Audio Video Texts Mobile Documents Search Engine Images Social Media THE NEXT GEN INFORMATION PLATFORM – IDOL 10 / Vertica CONTEXT-AWARE COMPUTING PATTERN-BASED STRATEGY INFORMATION SHARING MONETIZING INFORMATION • Provides the ability for enterprise to leverage and • Understands the meaning and context of use 100% of their structured and unstructured Human and Extreme information business relevant information • Ability to process information i l f in-place or in a • Performs advanced analytics and applies pattern- data warehouse based strategy in real-time • Makes information accessible to all enterprise • Designed to p g provide unprecedented speed, p p , applications pp simplicity and scalability31 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  28. 28. Key take-aways 1 New Architecture 2 Enables transparency 3 Enables experimentation, analysis, value creation, and new business models 4 Data Policy32 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  29. 29. Social Media© Copyright 2012 Hewlett-Packard Development Company, L.P.The information contained herein is subject to change without notice.
  30. 30. Social Media34 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  31. 31. Social Networks Demographics Population/Registered Users 1,600,000,000 1,400,000,000 1 400 000 000 1,200,000,000 1,000,000,000 800,000,000 800 000 000 600,000,000 400,000,000 200,000,000 035 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  32. 32. Corporates embracing social media36 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. Source: “How social technologies are extending the organization”, McKinsey Quarterly, November, 2011, http://www.mckinseyquarterly.com/High_Tech/Strategy_Analysis/How_social_technologies_are_extending_the_organiz ation_2888
  33. 33. Examples in Financial Services37 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  34. 34. Virtual Currencies & Loyalty Programs Frequent Flyer F t Fl Programs38 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  35. 35. Key take-aways 1 Reach and learn from customers 2 Mange brand 3 Drive campaigns 4 Govern appropriate usage39 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  36. 36. Mobility© Copyright 2012 Hewlett-Packard Development Company, L.P.The information contained herein is subject to change without notice.
  37. 37. Mobility becomes part of life for everyone... A d th scale i enormous And the l is•Instant connections, communication & collaboration is changing people’s behavior•Access y y y y g to on line services is part of daily activity – Mobility First is quickly becoming thebusiness top priority41 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  38. 38. Online and Mobile Banking TransactionsContinue to Increase R idlC ti t I Rapidly US Self-Service Banking Transactions by Channel (In Billions)100 ATM (CAGR = 0.8%) 0 8%) 80 Online (CAGR = 20.1%) 60 Mobile M bil 14.0 14 0 3.0 9.4 (CAGR = 84.8%) 1.2 5.6 40 30.0 33.3 35.0 23.3 23 3 26.8 20 11.8 15.3 18.6 18 6 5.6 7.3 9.1 14.0 14.2 14.3 14.4 14.5 14.6 14.6 14.7 14.8 15.0 15.1 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 201342 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. Source: TowerGroup 42
  39. 39. US Branch Transactions Are Declining(2010–14P)(2010 14P) Transactions (In Billions) 15 14.70 14 70 14.11 14 13.69 13 69 13.28 13 12.88 12 2010 2011 2012 2013 201443 © Copyright 2012 Hewlett-Packard Development Company, L.P. Source: TowerGroup The information contained herein is subject to change without notice.
  40. 40. Mobile Payments Landscape Physical Location / POS Online MobileP2P Transfers(Domestic andInternational)Payments toMerchants44 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. * Updated version of table from Edgar, Dunn & Company Slide 44
  41. 41. Example Mobile Applications45 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  42. 42. Bring Your Own DeviceBalancing choice while protecting corporate assets Benefits• Employees and customers use p y •Shift cost to users Shift tttheir own device •Increasing employee satisfaction •Accelerate technology adoption• How to: Concerns•E b Embrace •Acceptable U P li A t bl Use Policy • Minimum security policy• Govern usage • Company mandated security tools •Compliance and data ownership• Protect assets and data •Retrieving company data on separation g p y p Risks• Path towards pervasive computing •Unencrypted information •Consumer Applications •Weak passwords and security p y46 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  43. 43. Key problems for ITManagement of different platforms 2007 2010 2013• From a single client OS to multiple OS• Different devices, different form factors, different update and life y cycles ?• How to manage migration of existing platforms• What about current desktop /Laptop strategyOwn vs BYOD47 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  44. 44. Key issues for IT Security and risk management – Is it safe?Device Overload Ever-Changing Types, OSs and Security App Threats h Features  Insecure Access to Corporate Network Threats Apps  Usage of Many Secure Data Threats and Unsecure Networks  Sensitive Data Leakage  Lack of Reliability  Lack of Mobile Network  Device Lost or Visibility Employee Leaves User Th t U Threats  Corporate Network  Acting in Non- Vulnerability to Mobile Compliant / Threats Wrongful Ways48 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  45. 45. BYOD Considerations• Trust Model• Remediation options• Ti Tiered policy d li• User experience vs. security exposure tradeoff• Corporate data protection (in transit, on device) p p ( , )• Device control• Acceptable use policy (cloud services)• Li bilit assessment Liability t• Education49 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  46. 46. Hp Enterprise Mobility ServicesFramework Mobility Apps Platform Unified Communication• App Virtualization • Voice Transformation• Desktop Virtualization • Virtual Workplace• Mobile Apps – Native, Web • Unified MessagingMobility Device Management Mobility Protection• Infrastructure Mgt • Network Protection• Mobile Device Mgmt PROSUMER • Cloud Protection • Mobile Data Protection • Mobile Access Protection Mobile Data Mobile Applications• Storage Consulting • Performance Engineering• Mobile Data Trans. • App Transformation• Enterprise Data Sharing • Mobile App Management• Analytics/BI • Windows 7/8 Migration GRC - MoC Collaboration Enterprise Connectivity• Education Services (UC) • Search/ Information • Network Transformation• Education Services (Mobility) • Document Management • Voice over Wi-Fi 50 © Copyright 2012 Hewlett-Packard Development Company, L.P.• Mobility Policies (BYOD) • Social Collaboration • Fixed Mobile Convergence The information contained herein is subject to change without notice. • Mobile Process Enablement • Cloud Services Integration
  47. 47. Key take-aways 1 Mobility is the transaction platform of the future 2 Expect rapid technology innovations in near term 3 Enables innovation business models 4 HP recommends an encompassing platform51 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  48. 48. Summary© Copyright 2012 Hewlett-Packard Development Company, L.P.The information contained herein is subject to change without notice.
  49. 49. Positioned for the Future Mobile Social 10 Billion 10 Billion Network Mobile Devices Human Decisions People • Personal • Organizational Sea of 1 Trillion Insights & 10 Billion Sensors Sensors Actions Processes Process Control • Machinery Enterprise & 1024 bytes of • Workflow 100 Million o 1 Billion Consumer Data Stored Data Services Entities OUR ARCHITECTURE YOUR BENEFITS • Data and transform co-located • Fastest time to insight • Distributed and interdependent • Most connection to sources and actions • Secure and auditable • Isolation between circles of interest53 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
  50. 50. Key Takeaways for Financial Institutions2020 4B people online, 31B connected d i2020: l li t d devices, 25M apps Corporate and cons mers al a s online consumers always Everything digital Service- Service-based economy Data in motion architecture Consumer Marketplace growth Professional CHANNEL SERVICES CHANNELS USER SECURITY SERVICES (SSO, Authorization and Access Control) CHANNEL INTEGRATION SERVICE SECURITY (Authentication, Authorization and Access Control) Agility & Speed to Market BUSINESS SERVICES CORE BANKING OPERATIONS WEALTH CORPORATE MANAGEMENT INFORMATION EXTERNAL ENTERPRISE MANAGEMENT & INTERFACES SYSTEMS RETAIL TRADING DATA SERVICES RISK MANAGEMENT TREASURY & CASH & COMPLIANCE MANAGEMENT PLATFORM SECURITY (Authentication, Authorization and Access Control) PLATFORMS INFRASTUCTURE SECURITY GRC: Governance, Risk, and Compliance SERVICE SECURITY (Authentication, Authorisation and Access Control) IT INFRASTRUCURE HYBRID DELIVERY CLOUD Mobile Datacenter54 © Copyright 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. Source: IDC, ICT Outlook: Recovering Into a New World, #DR2010 GS2 JG, March 2010
  51. 51. Thank you© Copyright 2012 Hewlett-Packard Development Company, L.P.The information contained herein is subject to change without notice.

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