What financial services trends do I expect to see in 2019? I expect to see traditional financial institutions adopt new processes and practices, and invest in forward-looking capabilities – all to be better able to adapt to a fast-changing, and increasingly tech-driven industry ecosystem.

This year I expect business executives to take a more forceful role in driving digital modernization - from back office transactions through to digital engagement channels. High on the list of 2019 priorities should include cloud computing, open banking and application programming interfaces (APIs), artificial intelligence (AI), cybersecurity, and blockchain.

I believe there’s a growing perception that remaining competitive and relevant means moving away from monolithic and restrictive environments to distributed, self-service capabilities. Cloud computing is front and center of many modernization initiatives, for some time ‘cloud first’ has been a modernization mantra. But in 2019, I expect to see banks’ cloud strategies to take things to the next level – bringing traditional systems to containerized cloud environments, going beyond the net new use cases to bring cloud efficiencies to core areas of the business.

With this more holistic approach to cloud computing I look for interest in hybrid cloud to increase – moving more workloads to both public and private cloud environments. Having the agility to more quickly provision and scale up workloads as needed, and use innovative services from across a range of cloud platform providers can be seen as new type of competitive advantage. Security is still top of mind, and organizations will continue to carefully weigh which cloud environments, and which combination of cloud environments, can best meet their risk profile - considering options that address their desired control and visibility, security functionality, and support services. In addition, organizations will continue to weigh which workloads to run in which public cloud environments, and which to retain in private environments to allow for organizational-specific requirements to be met.

Greater Innovation, New Services and Shared Communities

There’s value to hybrid cloud-facilitated digital transformation. Banks should shift from legacy IT to  modern systems and adopt digital technologies so they can be better equipped to move into new industries, create additional revenue streams, and expand their product or services portfolio. In fact, in a survey by BDO, 62 percent of financial institution respondents that have planned digital investments anticipate a revenue increase within the next three years from their digital initiatives.

With digital transformations, we could see new digital banking services go to market quicker. Add containers into the mix, and developers should be able to package and isolate innovative open source apps with what they need to more easily run and move between development, testing, and production environments. I’m talking about building value-added digital experiences here – delivering customers personalized advice for achieving financial goals based on their behavior profiles, for example – not simply replicating standard branch or call center services.

It can be a short path from digital banking to open banking, and in 2019 I predict more banks will begin a journey to this emerging market that enables new types of payment services. Open banking offers a number of benefits. It can help financial institutions find a way to drive revenue by opening products and services to a broader ecosystem using application programming interfaces (APIs). It may also help financial institutions extend their reach outside of a traditional distribution model. It’s a way to integrate new digital capabilities from third-party providers into the existing infrastructure, without having to build the software themselves.

But if financial institutions are to expand their digital ecosystems, they should include plans for Open Banking and building feature-rich, agile, and adaptable APIs that can meet usability, access, and quality development standards. Regulation conformance that banks must address also will come into the picture. 

Come September of this year, for instance, European banks will have to be compliant with the European revised Payment Services Directive (PSD2) Regulatory Technical Standards, meaning that they may spend part of 2019 developing and implementing PSD2 security strategies. Accenture recommends embedding security upfront in new systems and APIs, “thus turning security into a business asset.”

Being Smarter

Another smart move for financial institutions this year might be to put money into AI and cognitive computing which have the potential to create savings and improve customer experience using smart software agents like robo-advisors that directly work with clients as well as a support staff, which can help to accelerate resolution times for issues in claims processing, for example. AI may also help mitigate risks by helping to combat money laundering and fraud. As increasing operational efficiency and improving customer experience are often objectives for banks, investing in technologies to assist the knowledgeable creative worker may be strategic. Automating low value tasks and enabling professionals to focus on collaborative high yield creative work can be another objective.

Another technology in the financial industry’s purview: blockchain, which has potential in smart contracts and programmatic interconnectedness for exchanging information, and supports anti-money laundering and know your customer (KYC) initiatives. But there are challenges with blockchain. For example, implementing smart contracts that allow complex modeling and codification of high value corporate finance and trade finance transactions is going to be trickier than it may first appear, and not only in terms of technical issues.

We hope you’ll check back in with us throughout the year to stay abreast of developments in all these areas, and plenty more.

(This blog has been revised from the originally published version.)


Alessandro Petroni leads the business and technology strategy to accelerate the adoption of Red Hat open source technologies in the FinServ/FinTech industry working with customers, technology and service partners across product management, engineering, marketing and sales. In this role, he leads Red Hat in assisting banks and other financial services firms in the go-to-cloud journey, adopting DevOps, influencing Red Hat R&D to focus on solving Finserv line of business' challenges developing open source reference architectures and open collaborative environments.

Prior to Red Hat, Petroni spent sixteen years serving top financial institutions including Lehman Brothers, Merrill Lynch Bank of America, Societe Generale, Citicorp and Deutsche Bank. He has covered leading roles as consultant covering engineering, operations, software development, and consulting. As banking IT director, he has implemented distributed solutions for capital markets and retail banking, managing large international teams. He graduated with a Master of Computer Engineering and Business Administration from the University of Trento, Italy and lives in New York.

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