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Friday, February 2, 2024

Digital transformation too risky during a recession? Not so fast

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Global economic instability has made rough waters, and balancing the books nowadays is a tough job, to say the least. Conventional advice on how organizations should behave in a tumultuous economic environment has been to do everything possible to cut costs across departments and ride out the storm. However, paying little attention to furthering investments in core banking technology is the riskier proposition. 

Arguably, banking infrastructure plays the most central role in providing critical services when the pressure is on. When the COVID-19 pandemic struck, banks quickly innovated back-end technologies so they could provide customers with rapid financial assistance required to keep people’s lives on track and the economy propped up. Faced with the onset of another Great Recession, an entire DevOps movement coalesced when operations and software development communities raised concerns about serious dysfunction in the industry. 

A newer development that serves as a great illustration of today’s potential is intelligent automation. Almost every organization in some way or another is currently engaged in efforts to eliminate rote work in favor of tasks that yield higher-value outcomes. A business degree isn’t needed to understand that speeding up processes and streamlining costs improves bottom-line growth. 

Self-service speed, flexibility

Self-service has historically been seen as a pure cost-cutting measure that often comes at the expense of a poorer user experience. This frame of mind is no longer valid. Multiple studies have proven that customers and banking professionals alike increasingly prefer the speed and flexibility that self-service enables.

Take the ability to ensure enterprise technology strategies meet challenging regulatory, compliance and customer service demands, for example. Speed is so crucial and fundamental to business that all institutions are feeling squeezed to build, deploy and operate their software faster. Approaches popular in the cloud today, such as APIs, managed services and serverless computing exist to increase this speed. Third-party microservices serve to help increase software development velocity significantly. 

Rob Brueckmann, vice president of engineering at Brace Software

Inefficiency in monitoring and troubleshooting, while sometimes unnoticeable at first, may bring it all back down. The cost of unplanned downtime can be rather expensive. Technology and research consultancy Gartner estimates that, on average, downtime can cost a financial institution an excess of $9,000 per minute of outage. 

Automated observability

Smarter technology decisions lead to a competitive advantage, especially in an increasingly complicated regulatory environment. The true cost of ignoring higher standards and changing regulatory demands isn’t solely about fines and sanctions. Noncompliance penalties pale in comparison to actual damage caused by true business disruption and productivity loss.  

The trend toward automated observability –– the ability for technology teams to have autonomous self-service –– is the key that will enable banks to successfully ride the waves of volatility. A clean and modern enterprise architecture changes the cadence at which financial institutions conduct business since it can be propped up and functional within hours, not months. 

Having a flexible and elastic infrastructure changes the speed and accuracy with which the overall enterprise can respond. Every aspect of a best-in-class cloud model, from deploying new software to processing client and consumer data, can be automated, remain fully traceable and reduce the human capital cost required to support it. 

Infrastructure automation

Full-stack observability, automated in real time across applications, storage, services, network and computing, may very well be the thing that prevents a future global economic crisis. For a growing number of institutions, infrastructure automation is at the top of the list for transformative technologies. The reason: infrastructure as a service (IaaS) reduces costs, mitigates IT complexity and makes organizations more efficient — all important factors to consider when grappling with survivability.  

Economic downturns are not new and will continue to come and go. Taking a proactive stance is the leading edge to better revenues, though. Financial institutions that prepare for the low points with the right technology can better position themselves competitively and future-proof their business.  

The most viable institutions will invest in digital transformation projects designed to help get businesses back on track faster than ever. The laggards will be the ones with developers that are hampered by the need to keep testing and debugging. Ultimately, industry players with the greatest commitment to transform at their core will take market share and thrive on certainty. 

Headache or opportunity?

The demand on technology departments for instant solutions can be viewed as a headache or an opportunity. The financial institutions that view the current uncertain conditions as a boon for digital innovation, and not a hindrance, will have the last word on how organizations can be more agile, insight-driven and productive over the long term.  

This time, it will be the implementation of observable infrastructure automation that will make up the next wave of leaders that fundamentally move the financial services industry forward. 

Rob Brueckmann is vice president of engineering at Brace Software Inc., where he and his team are responsible for the full-stack buildout of the company’s proprietary platform.


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