Red Hat blog
By leveraging containers, financial services institutions (FSI) can create a flexible compute platform, spanning the hybrid cloud to offer easier application portability that supports rapid application development and are capable of delivering new business technology at the cadence demanded by today's CEO. Delivering a platform that enables an idea in the morning to be delivered into production by the end of the day will be critical to remaining competitive in the face of stiff competition from new financial technology companies.
A combination of new entrants into the Financial Services sector - with innovative business models leveraging consumption based public cloud - and a generation that has been brought up as digital natives means the FSI sector has to evolve to remain competitive. Technology is becoming the new battlefield and to stay competitive, the financial services companies of today have to become the great technology companies of tomorrow. It has often been said that banks are IT companies with a banking license and that has never been truer.
More worryingly for the banking CEO, this disruption is identified as one of the major risks to the industry as a whole, with these new financial companies being placed into the same risk category that precipitated the most recent global credit crisis and the end of Lehman Brothers.
The US Office of the Comptroller of the Currency (OCC) states that ‘strategic risk remains high as banks consider business model changes and face challenges in growing revenue. Strategic planning remains important as banks adopt innovative products, services and processes in response to the evolving demands for financial services and the entrance of new competitors, such as out-of-market banks and financial technology firms'.
‘Cheap money' from venture capitalists - coupled with an unprecedented acceleration in the pace of technological evolution through open source technologies and the availability of low cost cloud computing – has created an environment where fintechs can seriously challenge established financial services institutions. This is eroding profit margins in areas of banking where there is a low barrier to entry for new firms.
One factor in the favour of traditional banking institutions is a regulatory and compliance regime that is more complex and onerous than ever before. In effect, regulation and compliance (which banks have historically viewed as a necessary evil) are actually protecting certain areas of their business from new market entrants.
Having identified that banks are facing new challenges and that new entrants are using IT to disrupt existing business models, how are we seeing the industry react? The answer is that banks are embracing the new IT paradigms and partnering with some of these financial technology companies or transforming their own IT departments to disrupt these new entrants to the market. Within these financial services companies constrained with "vintage" technology, those who will best cope with future challenges are already transforming their IT departments in the key areas around people, process and technology.
We have witnessed significant innovation and transformation (with open source technology making key contributions) in the way IT is developed and delivered in the past year. To deliver an IT department to meet the demands of CEOs we find CIOs using terms such as DevSecOps and Agile to transform the people and process parts of their organisation.
Coupled with this and to address the technology challenge, one of the most transformational technologies pioneered by the OpenSource community has been the Container, now curated under the Open Container Initiative and Container Orchestration Platform through projects such as Kubernetes from the Cloud Native Computing Foundation.
Containers represent a paradigm shift in the way technology is enabling new business capabilities to be developed and operated, connecting two IT department functions that have historically operated as separate silos - development and operations. Coupling containers with a Container Orchestration Platform gives a common language for developers to create new business value as well as enabling operations to run this on a common platform to simplify and reduce the costs of regulatory compliance. I would describe this as delivering a common API between dev and ops.
By harnessing Container Orchestration Technology, the datacentre becomes a fabric of components with considerable elasticity, enabling the enterprise to try out new ideas that can be built and tested quickly. Coupled with Containers - which enable developers and operations to speak the same language - financial services companies can deliver a platform that can take an idea from the business in the morning, through code in the afternoon and into production by the end of the day.
At Red Hat, we are delivering enterprise versions of these technologies, many of which have been pioneered by OpenSource communities, as well as creating new immersive innovation labs to enable organisations to transform their people and process. Further information about the OpenShift Container Platform or the Open Innovation Labs can be found at www.redhat.com