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Red Hat’s Tech Predictions for the Remainder of 2019

2019 will be a year that digital transformation will become more of a priority for banks

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  • Written by  Alessandro Petroni, Director at Red Hat
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  • Comments:   DISQUS_COMMENTS
Red Hat’s Tech Predictions for the Remainder of 2019

While it is hard to believe, 2019 is already here and with it comes a new set of financial services industry predictions. In particular, we at Red Hat believe that 2019 will be a year that digital transformation will become more of a priority for banks, with open banking platforms and strategies extending beyond the front office. We also believe that financial services institutions will continue to shift to the hybrid cloud, and that artificial intelligence will expand in scope and use cases. Read on to learn more about Red Hat’s predictions for tech in the financial services industry this year.

Digital Transformation and its impact on banking

Over the past few years, the rise of digital finance and customers expecting to be able to take care of their banking transactions on their smartphone created greater interest in digital products and services, along with around the clock support and customer assistance - while being able to initiate banking tasks from any location at any time. To help meet this customer shift, organizations should have a flexible and robust digital infrastructure.

A recent survey of Red Hat customers found that 35% of respondents are looking to new business models or introducing new digital products and services in the next twelve months, with respondents from FSI leading the charge. Digital transformation has become an increasingly strategic move for banks. In addition to increased mobile banking options and integration with apps and services like Venmo and Minted, banks can take digital transformation one step further and implement cloud-native mobile apps that are built from managed application interfaces (APIs) to deliver advisory services and collect data to help with better customer experience.

We predict that 2019 will see more banks re-focusing their efforts on creating and delivering digital-first offerings on an open platform on which they have room to develop innovative, personalized and integrated services, that can help maintain security standards and leading practices.

Increased emphasis on Open Banking

In 2018, open banking began to make inroads, especially through collaborations in open communities such as the Open Banking Project and collaborations like Red Hat and TESOBE. A new focus of open banking is going beyond regulatory requirements to become a means of retaining competitive relevance, especially in the increasingly tech-driven financial industry. As such, the lines between digital banking and open banking can become blurred, with open APIs being able to playing a role in helping banks build new digital products/services that help improve customer experience, they also are able to modernize heritage systems processing, much like the goal of digital transformation. Using well-managed APIs as part of an open banking platform and strategy can provide banks with a level of responsiveness, as well as a platform for open collaboration between software-first fintechs and traditional banks. APIs allow banks to open catalogs for integration with third-parties and digital intermediaries. From our experience, we have seen more banks understand that these collaborations can be opportunities for growth and their customers can benefit from them.

Additionally, we believe this year there will be a focus of open banking going beyond regulatory to helping to retain competitive relevance through new and/or renewed digital services that can match consumer expectations. Instead of competing, we find that the focus of collaborations with Fintechs and the business platforming aspects of banking in the increasingly tech-driven financial industry can now be envisioned as a means to accelerate innovation and be adaptive to new consumer preferences.

We believe that 2019 will see open banking evolve to become more of both a business strategy and customer expectation. We believe banks and financial institutions can benefit from figuring out a way to successfully build new agile technology platforms that can take advantage of investments made in historic systems. We believe open banking will become more mainstream, especially as competition to deliver digital services increases.

FSIs continue to shift to containers and the hybrid cloud

Containers themselves are not a new technology, nor should they be a new technical term. Containers can be leveraged by financial services institutions to create flexible compute platforms that - including when used in tandem with the hybrid cloud - can offer an easier approach to application portability that can also support faster application development while offering new innovations more quickly. For financial institutions that need to keep up with customer demands to be more digital, and also stay ahead of the competition, it can be important that new ideas be delivered to market more quickly and effectively.

In addition to being able to leverage containers for innovation, banks and FSIs can leverage the hybrid cloud. An open, flexible hybrid cloud can provide the infrastructure that organizations need to meet and support business goals, while at the same time being able to provide the infrastructure to be able to run diverse workloads in different locations, depending on the business need. This can help meet both business leader and IT priorities. By having an ability to move workloads across public and private clouds, FSI leaders can have greater flexibility to choose the right workload for the job, enabling increased agility. We predict that 2019 will be a year that more financial institutions and banks better understand the capabilities of using the hybrid cloud.

Artificial Intelligence in FSI and how it will be used

One of the other predictions for 2019 that we anticipate for FSIs is the increased use of artificial intelligence (AI) and machine learning (ML). As discussed at SIBOS 2018, AI is currently being used in terms of risk mitigation, by using it to decipher and discover undefined unknowns in data sets. AI also helps to find human-made errors, as well as can triage for human interpretation of data for correctness. This year, we anticipate these AI-based tasks to expand in scope and number, move into finance IT departments to help drive net new efficiencies, as well as AI uses that are embedded into business processing for better triage for human decisioning. 

Through leveraging open source platforms, banks can have an opportunity to provide innovative services for their customers and help stay ahead of the competition, while also helping to meet compliance regulations and security standards.

Alesandro Petroni is a Director at Red Hat

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