Bottom Line Results

By Samuel Greengard  |  Posted 2011-12-06

The last few years have presented nothing less than turmoil for the financial services industry. A sour economy, greater regulation, significant changes in business models and a spate of new technologies—many centering on cloud computing, social networking and mobile services—have altered the stakes … and ratcheted up the risks.

Coping with this new environment is no simple task. Not only is there a need to maximize productivity and manage costs, but banks, brokerage firms, insurance companies and others must build a more agile and robust infrastructure. It’s necessary to oversee a growing tangle of technologies and requirements in areas as diverse as data management, cloud computing, business intelligence (BI) and analytics, governance, social media, mobile banking, governance, risk and compliance (GRC), and security.

While there’s no single way to achieve best-practice results, the most successful organizations focus on build-ing more powerful and flexible platforms that ratchet up everything from customer engagement to internal auditing and compliance. In today’s 24/7 global business environment, the ability to align business goals with IT systems and processes has never been greater.

“Financial services firms are under enormous and growing pressure,” says Julien Courbe, partner in the Financial Services Advisory practice at PwC. “In many cases, technology is a key differentiator.”

Financial services firms have always faced pressure to provide customers with information and services quickly and accurately. But the introduction of the Internet and mobile banking has accelerated the process and changed the stakes. High-performance systems that squeeze out maximum efficiency are now critical. Sophisticated software that can cull, manage and extract data and put it to use in new ways is paramount.

Courbe says that financial services companies are wise to focus on three primary areas: better reporting and yield-management tools that provide deeper visibility into transactions and help meet regulatory requirements; improved information processing capabilities that revolve around digitization and creating paperless systems; and a customer-centric focus that involves mobile banking and a basket of digital tools, including social media. “The interaction points are changing rapidly,” he points out.

These issues, in turn, drive technology decisions, encompassing everything from data center design and storage infrastructure to customer relationship management strategies. “The challenge,” says David Nichols, leader of CIO Services for Ernst & Young’s Advisory practice in the Americas, “is balancing innovation and new services with security and overall risks, including business continuity and disaster recovery. These issues must guide decisions about how to implement various business
strategies and IT solutions.”

Robust Infrastructure

Building a robust infrastructure is at the center of Merlin Securities’ IT strategy. The mid-prime broker provides services that assist in trading, portfolio management and other areas for more than 500 hedge funds and other institutions.

“We require cutting-edge computers and cost-effective high-performance platforms,” says Bob Garrett, chief technology officer. The firm relies on 15 production servers to run order-management systems, data warehouse repositories, trading capabilities and other tasks.

The seven-year-old company, which has grown rapidly, found itself with an already aging infrastructure a few years ago. “We reached a point where we realized that we had to rebuild the entire infrastructure—from how we design our data center to how we manage the network and storage arrays,” Garrett explains.

The company turned to VMware to virtualize its servers and achieve more optimal utilization levels. “Because of bursts related to trading, we typically want to keep our average utilization level at 25 percent, but be able to, on a burst, deal with taking it up no higher than 50 percent,” he says.

Merlin Securities also upgraded its storage environment. “Over the last several years, as trading volumes have mushroomed, storage demands have grown enormously,” Garrett notes. Although the price of storage devices and systems has dropped considerably over the last several years, “the volumes have in-creased so significantly that storage has become very expensive,” he adds.

In order to avoid any degradation of service levels, Merlin Securities migrated to Dell EqualLogic SAN storage arrays, along with Dell Power-Edge blade servers and high-density 10 GbE switches from Arista Networks.

The company has realized some impressive results. Among other things, it has witnessed a five-fold increase in overall SAN performance with no increase in SAN power consumption; boosted SAN speed by a factor of 2.5; and realized a two-fold increase in CPU performance and RAM throughput.

Now Merlin is looking at using the infrastructure to build a hybrid cloud, which would further boost its internal capabilities and flexibility. “We now have an IT infrastructure that fully supports the business,” Garrett says. “We have been able to cut costs while improving our strategic capabilities.”

Bottom Line Results

Today’s rapidly evolving business environment means that organizations must draw a straight line between the data center and the customer, according to Ernst & Young’s Nichols.

“Every decision must come back to a basic question: How do we drive improvements to customers and provide the best service possible while protecting their data?” he says. “Organizations that fall behind the curve and lack the necessary protections risk seeing their business grind to a “screeching halt.”

At Danske Bank, a customer-centric focus has changed the organization. A couple of years ago, the second largest bank in Scandinavia realized that it had to increase its focus on delivering the right solutions to its customers. That meant building an IT framework and adopting a focus based on context.

The Copenhagen, Denmark-based company required a high degree of collaboration between people in various roles within the bank so that it could complete customer projects faster and better. “We had to become more efficient at what we do,” explains Peter Rasmussen, senior vice president of technology.

When the bank undertook a detailed assessment of its IT practices, “We realized that our time to market was too slow,” Rasmussen notes. In some cases, the IT organization required 14 months—and sometimes more—to bring a new system up to speed. Mergers and other major events wreaked havoc.

To remedy this situation, the bank adopted a more agile framework for IT development. Using IBM Rational Tools, it has amped up its integration test planning by unifying new and legacy systems on an integrated development platform.

The Rational Tools system has helped the bank get a handle on business planning, project management and IT-integration tasks. Teams working with customers now have a deeper and broader perspective into how projects are progressing, what stage different individuals and teams are at with processes, and how to incorporate feedback into the development process.

As a result, the time required to complete customer projects is down to an average of nine months, while productivity has spiked by upward of 10 percent. “We have achieved greater agility, and our teams are more motivated,” Rasmussen says.

Collecting Data

Putting financial data to maximum use is also a fundamental tenet at CoreLogic, a leading provider of consumer, financial and property information, analytics and services. The company collects data from thousands of sources and repackages it for approximately one million customers that are looking to reduce risk, enhance transparency and improve performance.

Using Sybase IQ and Informatics software, CoreLogic culls information from spreadsheets, Word files and myriad other public and private data sources—all while scraping data from Websites—in order to provide sophisticated information and analytics tools to its customers.

“When we rolled out self-service BI-type capabilities, the mortgage industry responded extremely positively, and that opened up an array of possibilities,” says Asif Rahman, director of application development for CoreLogic. The move, he adds, provided “a significant boost in performance and much better data compression than an older SQL database.”

What’s more, Sybase IQ allows the firm to distribute a single processing core across multiple nodes in a cluster and process transactions within subclusters. The next step, Rahman says, is extending its products and services to a mobile platform.

PwC’s Courbe points out that a robust and flexible technology infrastructure is the ticket for entry in today’s competitive business environment. With the right systems in place, it’s possible to support cloud computing, mobility, analytics and other initiatives—while accommodating core functionality requirements, including GRC and security.

The ultimate goal, he says, “is to create greater intelligence through the sharing of data across the organization. Private clouds, mobility and social media can help an organization leverage capabilities to maximum advantage.”

The key, Ernst & Young’s Nichols concludes, is focusing on ways to make information technology more strategic. “It’s important to ask a number of questions,” he says. “How do we adopt the changes the business requires? How do we supply the business with the tools it needs to evolve and implement a strategy? And how do we prioritize changes?

“You’ve got to be nimble. You’ve got to be flexible, but, in the end, you must be efficient and drive the functionality that’s required in today’s business environment.”

5 Ways to Drive Gains in Financial Services

• Build a robust and flexible infrastructure. Financial services firms have always required fast networks and powerful computing capabilities. But, in recent years, customers have come to expect even more powerful features and faster execution of transactions.

• Focus on the customer. As financial services become more segmented and fragmented, it’s critical to connect to customers in multiple ways: branches, ATMs, mobile apps and through social networking. Technology must link different channels seamlessly and provide data instantly.

• Put data integration and analytics at the center of the business. Web analytics, social media analytics and predictive analytics provide insights and define strategies.

• Embrace security and GRC. Regulatory and compliance issues aren’t going away. An IT infrastructure must incorporate tools and capabilities that provide maximum visibility and protection.

• Explore the cloud. Private and hybrid clouds offer opportunities to increase agility and use computing resources more efficiently.