As you’ll have read in the first part of this blog series, financial services firms are currently facing a number of critical challenges, such as complying with regulations like PSD2 and FRTB. Yet, until now, the majority have done very little to address these issues.
Here we’ll look at how they can overcome these challenges and why innovation will be instrumental in achieving this.
The Importance of Innovation
One of the most effective way to overcome these challenges is to implement innovative new technologies and solutions. By far the biggest driver of innovation for IT decision-makers within financial services businesses was “emergence of new technologies” (48%). However, these organisations must be careful that new technology doesn’t disrupt their existing organisational systems.
When it comes regulations like PSD2, there are a raft of specific requirements that financial services organisations and their IT teams will need to meet. In particular, they will need a data platform that can ingest real-time transactional data as well as from a variety of other sources of historical and reference data, normalise it and make sense of it.
Any chosen solution needs to be able to ‘touch’ those disparate databases and silos, rationalise the data and make sense of it in real-time. The ability to process transactions at scale in real-time and simultaneously run analytics using transactional real-time data and large sets of non-real-time data (e.g. historical and reference data) is a critical capability for various business requirements. For example, powering mission critical trading platforms that cannot slow down or drop trades, even as volumes spike. This kind of capability has the potential to bring significant benefits to many financial services businesses today.
It is crucial that the chosen platform is agile and can also perform analytic queries – or ask questions – of the data that the organisation holds even if that data is in large data sets and stored in different data and application silos. This capability is critical for complying with regulatory requirements and answering unplanned ad hoc questions from industry regulators.
What’s the Solution?
Data platforms that combine Hybrid Transaction/Analytical Processing (HTAP) database management capabilities, comprehensive integration capabilities, and advanced analytics capabilities – including machine learning and can scale in a resource efficient manner, are critical in today’s environment.
HTAP databases are being used in financial services, as well as in many other industries, for their ability to uncover new insights, create new revenue opportunities, comply with stringing regulations, and improve situational awareness and overall business agility for organisations.
Additionally, the best HTAP database platforms deliver the performance of an in-memory database together with the persistence and reliability of a traditional operational database. They are also optimised to accommodate high transactional workloads and a high volume of analytic queries on the transactional data concurrently, without incident or performance degradation, even during periods of market volatility.
They deliver fast transactional and analytic performance without sacrificing scalability, reliability or security. They can handle relational, object-oriented, document, key-value, hierarchical and multi-dimensional data objects in a common, persistent storage tier.
The Pace of Change
Above all, this change is being driven by the growing availability of a raft of new technology capable of delivering innovation and enabling financial services firms to keep pace with the need for speed in terms of data processing and analytics, while at the same time meeting increasingly challenging regulatory requirements. For those firms that grasp the opportunity, the future will soon be here.