auxmoney began as a peer-to-peer lender in 2007, with the mission of improving access to credit and promoting financial inclusion. Right from the start, auxmoney leveraged cloud-enabled analytics for its unique risk models and digital processes to further its mission. This approach has seen auxmoney becoming Europe’s largest credit marketplace and leading digital-lending platform for consumer credit in just 15 years.
Its success is one of many instances illustrating how the financial services industry is quickly recognizing the benefits of data analytics and what it can offer, especially in terms of risk management automation, customized experiences, and personalization.
Particularly in Asia Pacific, revenues for big data and analytics solutions providers hit US$22.6bn in 2020, with financial services companies ranking among their biggest clients. Spending on big data technology among financial services companies is expected to grow even further, with projections of 15.6% compounded annual growth from 2019 to 2024.
The Challenges in Scaling Analytics
However, many financial services companies still prefer to build their own data centers rather than leverage cloud solutions. Much of this reluctance stems from the regulatory environment, arising from lengthy reviews and approvals processes, or even simple near-term regulatory uncertainty.
Even so, the sheer growth of data being consumed globally—79 zettabytes in 2021 and expected to grow to 180 zettabytes by 2025—suggests that traditional solutions employed by financial services will struggle to scale at the same rate. The reliance on legacy systems can even sway financial services companies to accept short-term, tactical solutions to growing capacity constraints, leading to sprawls and further locking these systems in place.
Having disparate data sources housed in legacy systems can add further layers of complexity, causing issues around data integrity, data quality and data completeness. Critical processes such as Know-Your-Customer can be impacted by data siloes, as companies find themselves struggling to ensure the most updated information is captured and shared across processes.
As a result of these challenges, companies relying on legacy systems can find themselves unable to connect the dots to develop seamless service offerings, integrate and personalize experiences, and avoid hidden compliance issues. In turn, companies may struggle or worse, be unable to meet the evolving needs of their customers effectively and quickly.
The Solution for Scale and Speed Lies in the Cloud
The future will increasingly be cloud-native, according to a Gartner report that predicts more than 95% of new digital initiatives will be founded on cloud-native platforms.
“FSIs want new-age sophistication without legacy complication. Forged through partnership and understanding of client needs, cloud-native environments bring together financial experience and strategic expertise across AI and analytics to deliver effective outcomes for their business. We believe that this approach will empower organizations to simplify problems, as well as learn and apply best practices that ensures compliance and security. Together, we make a positive impact on the creation of a resilient, digitally inclusive digital economy,” said Umair Hameed, Financial Services Lead, Microsoft Singapore.
A transition to cloud would take a hybrid approach, to address key concerns of financial services providers on the level of control and security that usually require on-premises solutions, while offering the scale and agility of the cloud. A hybrid solution allows for static confidential data to remain within company premises while other operations such as financial transactions, processing, analytics, and workflows can be migrated to the cloud.
Leveraging cloud solutions can also unlock the potential of the massive data that financial services companies regularly accumulate. “Cloud solutions offer a unified, agile end-to-end platform that facilitates fast big data analysis,” says Sharad Gupta, Director of Pre-sales (ASEAN) at SAS Institute. “Quality data and cloud-based analytics enable the game-changing ability to make data-driven strategic decisions.”
For many financial services companies, successful transition will hinge on finding the right partners on the cloud journey, one that can bring together both leading analytics expertise as cloud capabilities to capitalize on financial, transactional and customer data.
One such partnership is that between SAS, recognized as the longest-standing leader in Gartner’s 2021 Magic Quadrant for Data Science and Machine Learning Platforms, with Microsoft Azure, a leader in the cloud computing space in the 2021 Gartner Magic Quadrant for Cloud Infrastructure and Platform Services. This symbiotic partnership allows integration of SAS analytics capabilities with Microsoft’s cloud solutions, as well as building of new market-ready joint solutions for customers natively integrated with SAS services.
We see this demonstrated in S-Bank, ranked No. 1 in Finland for customer loyalty. The bank used SAS Viya on Microsoft Azure to provide better customer service and achieve faster loan processing time. Analytics models enabled real-time decision making and automation to help the bank stay focused on costumers. In another case, The North Carolina Department of Insurance overhauled its outdated records management system and leveraged SAS Cloud solutions to deploy and scale analytics seamlessly, recovering US$6.9 million in insurance fraud in just 7 months.
These two examples illustrate the game-changing potential offered through leveraging cloud solutions. As data consumption continues to grow exponentially, financial services companies must recognize that legacy systems simply cannot offer long-term solutions. It is critical for financial services companies to find the right partner and take the next step into cloud-native solutions, to be ready for the future.