Predicting IT incidents in Financial Services

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As we’ve mentioned in previous blogs, one of the UK’s biggest banks, TSB, learnt the hard way earlier this year when it came to protecting their highly valuable systems from IT failures. The BBC coined the term ‘technology meltdown’ after 2 million customers of the bank lost access to their online banking services. Since then, a second ‘meltdown’ has occurred, and TSB’s CEO has stepped down.

 

Banks have been slow to move legacy systems to cloud

Banks and FSIs around the world have been slow on the uptake to modernise infrastructure and move legacy systems to the cloud. The complexities that surround moving large amounts of secure data, constantly changing market dynamics, and a need to shift company culture (such as moving to a more agile way of working) is tantamount to redesigning an entire industry. The problem is that this failure to move forward and be relevant has proved costly, and regulatory services have made the FSIs pay out large and easily preventable fines.

Anuj Saxena, Head of FSI at Nordcloud, wrote in his blog that financial institutions often plan for highly available service operations and don’t consider potential failures. But one of the ways these businesses can improve their operational resilience is implementing automated tools and processes in order to recover from these potential incidents. Engaging with a Managed Cloud Services provider is the start of the solution.

 

Planning for failure by implementing a well-oiled machine

At the risk of sounding negative, planning for failure is the key to keeping systems up and running. Employing a DevOps function like the team at Nordcloud who have the experience in automating end to end deployments, operations & recovering cloud infrastructure, allows for flexibility and innovation, and creating runbooks and playbooks allows the teams to compare and match certain standards.

FSIs need to become operationally resilient so they are not held back when an incident happens. Having a ‘well-oiled machine’ that will be able to respond to incidents quickly and agily will improve this resilience.

 

But what’s the point of having this ‘holy-grail’ of automation unless you have someone who knows how to manage it?

 

A dedicated Managed Services Provider

Cloud experts within Nordcloud have experience in knowing what to monitor & what thresholds to configure out of the box, ensuring that problems are identified earlier and solved quicker.

Our team uses an advanced adaptive (outlier detection), automated full-stack monitoring and instrumentation platform to enable a 360-degree view of a business’s infrastructure, ensuring that potential issues are identified and resolved before they become an issue. This automated response means reactions are faster, and human error is eliminated. In the same sense, developing a comprehensive runbook promotes standardised operating procedures which can be used repeatedly, allowing you to move to market faster.

Businesses should also organise regular ‘Game Days’ where failure is simulated, and runbooks and playbooks are tested to ensure that in the event of failure, response and resolution is well rehearsed and therefore fast. Nordcloud’s team of experts can manage this and other day to day operations, helping our customers meet the regulatory compliance they require.

IT time is valuable and generally scarce and your department should be focussed on projects that improve your company’s bottom line. FSIs who engage with Managed Cloud Service providers will be able to save sizeable amounts of money on potentially avoidable fines, and in the meantime make sure their customers’ online experience is not affected.  

Realise all the benefits the public cloud has to offer FSI

 

Cloud computing is on the rise in the financial services – are you ready?

Download our free white paper Compliance in the cloud: How to embrace the cloud with confidence, where we outline some of the many benefits that the cloud can offer, such as:

  • Lowered costs
  • Scalability and agility
  • Better customer insights
  • Tighter security

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    Building operational resilience for FSI businesses

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    A lot has been discussed and written about the recent TSB bank fiasco that saw its customers unable to access their banking services. The interesting thing is the planned downtime was supposed to last only 4 hours but instead went on for almost 48 hours (12 times more) for many of it’s customers, and left them ranting and raving about how helpless they felt while the bank took its (long), sweet time to sort out their mess!

    There are few fundamental issues here, but the one I want to focus on is the fact that this isn’t the first time it happened with TSB (it also occurred in April 2018) or within Financial Services & Insurance (FSI) vertical – there already have been occasions when an IT systems meltdown happened unplanned, or a planned maintenance lasted 12 times longer than expected. At the same time in a world where we talk about Robotic Process Automation (RPA) & Artificial Intelligence (AI) taking over everything that’s mundane, repeatable and quick to learn, do we really understand the problem fully enough to find a solution to building an enterprise business that’s operationally resilient?

    Firstly, let’s understand why Operational Resilience (OpR) is important in FSI:

    • Threatens the viability of firms within FSI and causes instability in financial systems.
    • Introduces significant reputational & business risk within the ecosystem, hampering growth and confidence for all participants involved.
    • Hinders the ability of firms to prevent and respond to operational disruption.

    One way to get a grip on the OpR problem is to look at these incidents and happenings from the perspective of other participants, (apart from Banks and Financial Institutions (FI)) in the Financial Services ecosystem, i.e. Customers & Regulators. There have been numerous questions and concerns from both these participants but to keep it simple, the top three that we hear the most are:

    1. How can you not get it right after you have failed many times?
    2. How long is long enough to be unexpected?
    3. How do we reward for failures?

    How can you not get it right after you have failed many times?

     “The true sign of intelligence is not knowledge but imagination” – Albert Einstein

    The point being, we need to apply new age design thinking into age old processes and do some right brain activities to come up with out-of-the-box ideas. You might think it’s easier said than done but going back to the principle of design thinking – empathising with the user- is a great place to start.

    Since FSI is such heavily regulated sector, it needs to develop focus areas based on an end-to-end lifecycle of business services (i.e. inception, delivery & maintenance) that impacts its market participants, profitability and risks directly. In the diagram below, I look at an example of a business service – “Retail Mortgages”.

    Looking specifically at this service, the FIs need to think how they can break it down (for OpR) into three key pillars – Focused Services, Technical Enhancement & Risk Management, followed by a framework that identifies, maps, assesses, tests & governs the whole mechanism in a periodic way.

    This is exactly where public clouds are such key enablers for this new world design thinking due to the flexibility, security, standardisation and resiliency they provide. As you introduce new business services into this framework the communication and governance should be standardised and in-line with your internal audit policies, only then will you be able to achieve true OpR by investing in all the aspects of that service. This also helps you answer questions like ‘should we buy more capacity and IT staff for testing a CRM system or should we improve the OpR of business-critical mortgage services?’

    retail mortgages

    Business Architecture for OpR Framework in public clouds

    How long is long enough to be unexpected?

    When I ask this question to some of my colleagues in financial services, their response is typically synonymous to the answer you might get if you ask someone ‘how long is a piece of string?’ which frustrates me. Ultimately, you don’t know until you measure it. Once you have applied some design thinking on your business services the next step is to measure & communicate them. With public cloud there are numerous ways to develop an automated process or introduce new tooling that can help set-up impact tolerances specific to your business service. You can run stress testing and simulate numerous operational scenarios and report back on a management dashboard, (without significant capital expenditures) present it to your company board, internal audit teams (to match alignment) and keep it ready for your external auditors when they ask for it. You can therefore measure your OpR and predict the expected downtimes in a much more accurate way rather than running into long and unexpected downtimes.

    How can we reward failures?

    This is a bit of a grey area hence it is important to get straight to the point – financial institutions put aside a lot of money for paying fines to regulators, compensating customers for loss of service and confidence, and at the same time, giving big pay-outs to staff for achieving irrelevant goals that are not in line with business focus areas. To fix this, the overall governance framework needs to set goals specific to selected business services, empower staff with set of right tools that helps run & manage the operations and have board level oversight to measure goals through open, fair and transparent metrics that not only looks at internal participants but include the interest of market participants like customers & regulators. By having this mind-shift and moving to the public cloud, financial institutions can lower compensation towards failures and invest where they really need to.

    In a nutshell

    to build an operationally resilient public cloud infrastructure:

    1. Focus on business services in the order of highest priority based on your organisational goals, you will notice that by doing so the investments are going to the right places, in the right detail, in a timely and systematic way and failures are only going to make you better, not miserable.
    2. Set-up operational metrics and impact tolerances that will be collected and reported to measure your operational resiliency. Use tooling and automation offered within the public cloud to improve governance & actionability within your organisation.
    3. Manage business risk through goal setting and empower your teams with the right tools and transparent processes.

    It’s high time the financial institutions stop ‘putting the cart in front of the horse’ or doing the same thing over and over again expecting a different result. It’s time to re-think, to re-imagine, to re-invent and to re-organise the mess by embracing the public cloud and delivering what your customers really expect by working with market leaders like Nordcloud.

    FSI ready high grade offering from Nordcloud

    Nordcloud offers a full stack cloud offerings, starting from enablement, governance, migration to business service operations. Within FSI we have designed specific frameworks that comply with regulatory standards and can be adopted out-of-the-box with bespoke configuration. Letting you focus on your core business while we take care of everything else.

    Contact us here to learn more about how to build an operationally resilient business.

    Cloud computing is on the rise in the financial services – are you ready?

    Download our free white paper Compliance in the cloud: How to embrace the cloud with confidence, where we outline some of the many benefits that the cloud can offer, such as:

    • Lowered costs
    • Scalability and agility
    • Better customer insights
    • Tighter security

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      Cloud Computing News #1: Financial institutions need cloud

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      This week we focus on cloud adoption in the Financial Services Industry.

       

      Global study reveals investment banks welcome public cloud adoption for innovation first, not cost reduction

      GFT, the global IT consultancy for the financial services industry revealed in July the results of their global study into cloud adoption across the capital markets functions of over 32 tier 1 and tier 2 investment banks.

      According to the cloud adoption survey:

      • Cloud adoption is on the rise: investment banks are set to increase their use of public cloud by over 50 % within the next five years
      • Main benefits agility and elasticity: 3/4 of investment banks are more excited by cloud computing’s ability to introduce agility and resource elasticity into their businesses than its ability to simply deliver cost reductions (50% of respondents)
      • Where to adopt it first: investment banks are most keen to introduce cloud in development / testing (67%), front office (55%) and risk (43%) departments
      • Some concerns remain:  90% of respondents cite regulation their main concern for cloud adoption, followed by data protection (72%), and security (70%).

      Find out more about this study here

      Read more on why the Financial Services Industry needs to rethink its IT by embracing the cloud in our recent blog here.

       

      Open banking forces banks to focus on consumer centric products and services

      According to a recent study by PwC, the emergence of open banking requires financial institutions to think differently about how they will deliver value to their customers. Open banking is going to transform the way we pay for goods and services and manage our finances.

      Currently, banks are burdened by a product-centered thinking legacy.

      What are the challenges open banking poses for traditional banks?

      • New strategy and business model
      • New customer centric operating model
      • Openness to partnerships or operating as part of a wider ecosystem of providers
      • Data management
      • Technology platform
      • Cybersecurity and risk management

      Open banking revolution will create new partnerships or create joint ventures between banks, fintechs or hyper-scale cloud providers and enablers like Nordcloud to be relevant in the future. In the long term, banks will need to find a new place in the disrupting industry.

      Download the PwC survey here

      Read also in our blog how to build a business case for the cloud in financial services.

       

      Barclays Bank intends to shut down 18 datacenters and go all-in with AWS public cloud services

      According to Barclays, the project is part of a wider push by the banking giant to increase its ability to respond to the ever-changing financial services landscape.

      “With cloud technology, you can scale from zero and get to market very quickly; and get an idea to market in weeks, if not days” said Nick Funnell, development practice lead in Barclays’ chief technology officer application hosting division.

      Barclays is going all-in on the AWS public cloud through adopting the principles of DevOps.

      Read the full article in ComputerWeekly

       

      Follow our blog to get more regular updates on financial institutions and the public cloud!

       

      Cloud computing is on the rise in the financial services – are you ready?

      Download our free white paper Compliance in the cloud: How to embrace the cloud with confidence, where we outline some of the many benefits that the cloud can offer, such as:

      • Lowered costs
      • Scalability and agility
      • Better customer insights
      • Tighter security

      Download whitepaper

       

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        How to build a business case for the cloud in financial services

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        The financial services sector is well known for its caution surrounding technological change, due to its history of regulations, legacy and money handling. However, with constant pressure on IT budgets and the need for digital innovation, financial services firms can no longer ignore the benefits the public cloud have to offer.

        In a recent survey, 74 percent of banks report that the cloud will become a major factor in the industry within the next five years. Why? Because the cloud offers the financial services a cheaper, more scalable and agile way to improve their business operations without having to compromise security or compliance.

        In this blog post, we’ll discuss the business case for moving your financial business to the cloud. Here are four benefits that may help solidify your decision to embrace digital transformation:

        1. Cost Reductions:

        In today’s unsteady economy, financial services are not just looking for ways to cope with cost pressures; they’re looking to invest in innovative technology to help them:

        • Compete with FinTech insurgents
        • Improve operational efficiency
        • Accelerate modelling and analysis
        • Serve customers better
        • Differentiate themselves in the market with innovative services

        It’s no secret that well-architected environments in the cloud are a cheaper alternative to co-location or on-premise solutions. In fact, 88 percent of financial institutions believe that the reduction in TCO (total cost of ownership) is the biggest benefit of a cloud-based infrastructure. By embracing the cloud, money that was once spent on capital infrastructure and keeping servers cool can instead be used to focus on operations and opportunities that matter to individual businesses and their customers.

         

        2. Integrated Security:

        Although traditional data centres offer businesses a physical sense of security, they aren’t always the best long-term or most economic solution. For financial services that are planning on scaling their business and using new, innovative technologies, moving some of your infrastructure to the cloud is almost inevitable.

        It’s important to note that this move does not make your data less secure. Despite the security myth surrounding cloud technology, your sensitive information will remain safe on the cloud, providing your financial business has a clear and strictly implemented security policy. Your level of security also depends on your cloud service provider.

        Here are some examples of security features your provider can offer:

        • Access control that allows you to choose who in your business can, or cannot, access sensitive data. For instance, Azure Active Directory helps ensure that only authorised individuals can access your applications, environments and data.
        • Behaviour analytics that can detect threats and anomalies and report any unusual behaviour or unauthorised access.
        • Integrated security across all of your business’ applications, meaning that employees are safe to work from anywhere.
        • Continuous monitoring of your servers, applications and networks to detect threats. Businesses also have the option to deploy third-party security solutions within their cloud environment, such as firewalls and anti-malware.
        • Physical security. For example, Azure’s regional data centres include fencing, CCTV and security teams.
        • Shared security with your cloud service provider. In order to keep your data as secure as possible, your business needs to take responsibility for your own security practices, in regards to your applications and employees.

        3. Quick & Economic Scalability:

        Growth is important to all businesses, particularly when you’re handling new customers and data on a daily basis. With the cloud, companies can scale and deploy releases quickly and continuously (either automatically or manually) according to demand, or reduce resources if needed. This means that you only need to pay for the platforms that you actively use across your business or IT infrastructure.

        For example, an insurance firm may need to run complex risk models to respond to market changes. Doing these calculations in the cloud lets them access hundreds or even thousands of processors to complete the modelling quickly. Yet, this performance isn’t required all the time so delivering this kind of high-performance computing cluster in-house is prohibitively expensive.

        4. Big Data, automation, and analytics:

        Storing large amounts of data isn’t much use if you don’t know how to handle it. Unlike traditional storage solutions, the cloud delivers a better, cheaper and more personable approach to big data and analytics. The intelligent insights you can harness allow you to deliver the best internal and customer engagement actions for your business.

        Big data and integrated customer relationship management tools can allow you to:

        • Gain a 360-degree view of customer information and profiles. This can allow financial services to gain a better insight into customer trends and risks, as well as offer an opportunity to improve customer services.
        • Analyse transactions and operations quickly without having to manually look through masses of documents and memos. Ultimately, this allows the financial services to gain better insight into market trends, provide better customer service and help to automate some time-consuming workloads.
        • Access structured and unstructured data quickly across one integrated platform. Financial services are able to analyse this data to gain insights into regulatory risks across all disparate sources.

        Embracing Change

        Due to the regulations surrounding financial institutions, these organisations have historically been slower at adopting the cloud than other verticals.

        However, the competition is not going away. The financial services industry is being challenged by more digitally focused banks that are able to offer their services quicker and more efficiently. This is because they have built their infrastructure in the cloud.

        Using an experienced partner can help you to achieve the maximum benefits the cloud has to offer. So, if your financial business is ready to make the move to the cloud, contact us here. We’d love to hear from you.

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