THE FINANCIAL SERVICES OUTLOOK External Challenges Financial services is a highly competitive industry that is riddled with high barriers to entry. Challengers historically found it difficult to break through drastically low margins and tightening regulations. However, large enterprises that once dominated the market are now facing disruption from smaller, leaner fintech companies that are eating away at the value chain one discrete bite at a time. Typically marked by technological agility, specialization, and customer-centric UX, new challengers in financial services present a serious outside threat to established players. In fact, PWC Global has estimated that 28% of all incumbent Banking and Payments business is at risk in the wake of the FinTech movement. Internal Challenges This shift leads us to the realization that legacy presents an increasing risk to these large organizations. Comparably ancient technologies and rigid software architectures can make maintenance and change over time costly and extremely challenging. Management of these architectures is further complicated by high acquisition activity in the industry (the silver lining of that FinTech movement we mentioned), thereby introducing incompatible systems. And then, there’s the rise of multi-channel financial services that presents a whole slew of additional integration trials. To remain competitive, financial services firms are reconsidering cumbersome architectures and transforming them into something more adaptable. In fact, a recent survey of financial institutions found that ~85% of decision makers consider their core technology to be too rigid and slow. Consequently, ~80% are expected to replace their core banking systems within the next five years. Could this be where microservices plays the Deux es machina of the banking saga, swooping in to save the day?
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