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Every now and then I am lucky to get into meaningful technological discussions with people older, wiser and more important than me. Last week was no different! This time, the discussion began with infrastructure of the city and somehow ended up about infrastructure in the enterprise world! This blog post discusses in brief how retail banking, analytics, cloud and legacy systems are each impacting infrastructure and in the end what might be a good way to start making changes!

The aim is not to write ‘explaining infrastructure’ but a little about the future possibilities! Infrastructure, in this blog post, includes hardware and software. Basically anything that allows information to flow/processed between systems.

While we wondered how infrastructure would be used, our discussion was predominantly focused on the financial services domain! The question was not just how much of the IT should be in-sourced vs. out-sourced, but how should infrastructure be managed?

Cloud Banking Infrastructure

“Banking” on Infrastructure – Mission Impossible

Banks are complex organizations. They are involved in numerous activities and need to abide by laws and regulations. Banks look for redundancy but their ability to understand the data is going to be key moving ahead. Most banks have been running systems in silos and adding modules upon modules over the previous versions. Radical and disruptive movements were not the norm and nor will it be the case in the future. So the move towards being more “agile” and customer centric will make financial services firms forcibly think about how infrastructure needs to be maintained. If nothing (actually everything), analytics will indicate a possibility of a financial meltdown 😐

On a different note, with the ever increasing space of retail banking, banks need to anticipate customer needs, become innovative in developing new products and services for the customers and internally make processes efficient! Banks, more than ever, need to exploit Big Data and Cloud Computing else a number of players like Google and PayPal will cut a significant portion of the bank revenues. I won’t even get started with what niche players in the Big Data Analytics space might do. However changing core-banking systems is not easy – you can’t shut down operations to change systems! It’s a vicious cycle. Institutions need to answer shareholders, banks too. The focus on profit margins and growing market share must include the need to mitigating risks ranging from system failures to cyber attacks – technology changes around infrastructure needs to be the primary focus. Not necessarily radical but incremental steps. Banks will need to think of more ‘standard offerings’ in their business models to get a faster ROI? New infrastructure will need to address new applications vs. existing applications? How will mobile and virtual infrastructure take into account customers needs?

Cloud is here to stay, but will security concerns; data accessibility and  ‘residency’ ensure private cloud offerings are the only way ahead? Not holding customer data in-house might prove the biggest differentiator in the future. Holding data in-house will mitigate risks to a large extent since only a single environment and standard rules and protocols will apply. Additional service offerings from ‘within’ will start because customer analytics around behavior and patterns will be analyzed – leading to a higher degree of personalization. However, two big concerns are the expertise the banks will need, and the CAPEX vs. long term savings and flexibility. Until now customizations have led the front, now banks need to look for configuration with a mix of private cloud and on-premise systems.

As I move on to new adventures in the coming days, the celebrations and chaos continue in my life. I recollect what His Holiness Sri Sri Ravishankar once said about celebrating silence with a smile and think of the ‘infrastructure’ within 🙂