Many banks, including UBS and Credit Suisse, are adopting agile methodologies and embracing the Cloud. Finews.com talked with a senior managing director at Accenture to discuss developments and trends.
It comes as no surprise that banks are very conscious about costs and how to reduce them, nor that they are moving increasingly into the Cloud. But there is more than the question of cutting spending when it comes to embracing the Cloud.
«The reason for Cloud usage is not a cost reduction infrastructure, but business model innovation for new products and services at an accelerated speed», Frédéric Brunier senior managing director and Europe lead for cloud-platform-data told finews.com in an interview. He is also a member of Accenture's global leadership committee.
A more transparent Swiss banking industry is partly behind the trend behind the move to the Cloud, even though privacy remains a paramount issue.
Banking Secrecy
Banks are moving to the cloud at an accelerated speed, Brunier said, adding that workloads have doubled year on year. Also, for example, «UBS and Zuercher Kantonalbank are on their journey to the Cloud and are moving significant workloads» there.
«Accompanied by the loss of what I would say is Swiss banking secrecy, there's more opportunity now to leverage those technologies for the advantage they provide,» he said.
But even without Swiss banking secrecy, it doesn't mean there is a data free-for-all that banks can use, and privacy remains a very big issue. To some degree, it is also a constraint for developing technologies around customer data.
«Is it still a limitation? Absolutely – and a necessary one: Data privacy has to be respected,» he said.
Agile Culture
As banks move increasingly into the digital world, Brunier observes that «technology literacy on bank boards is still insufficient. The future calls for more technological acumen.»
With technical innovation also come new ways of working. In fact, both UBS and Credit Suisse are embracing agile working methodologies, and for institutions that have traditionally been very hierarchical, that comes with some cultural challenges.
Roughly speaking, an agile process is a more iterative approach to projects that responds to change rather than following a strict path. This is in contrast to a «waterfall» approach which aims to complete projects step-by-step and is seen as being less flexible than agile methods.
UBS CEO Ralph Hamers is a self-confessed Agile fan, so much so that the bank released a new working model under «Agile@UBS».
Brunier said that by adopting agile, cultural changes are necessary, not only operationally but at leadership level, because leadership is used to being in control and wants to understand the return for a specific budget and time. «An agile way of working requires a change in culture because instead of managing demand, you are managing capacity,» he added.
He cautioned, however, that if not done properly and supported by the leadership, it can turn out to be more costly than using a waterfall approach.
In a changing world, it is important to adopt a flexible approach, one which Hamers has strongly embraced. Using Agile becomes more of an adventure than a well, trodden path.
«Why would you do Agile when you exactly know what you want and are clear on the outcome? There is no reason to do Agile if you know what you want and the exact road to get there,» Brunier said.
Digital Transformation
There has been much discussion over the topic of the digital transformation of traditional banks and the more nimble startups coming to the market to challenge traditional banking. The view, for the most part, has been that banks were somewhat stodgy, but had a well-established and loyal customer base, while the more nimble fintechs were the cool new kids in town.
Seeing the potential, the traditional banks swooped into the digital world. Both sides seem to be learning from one another.
«Some banks have taken action too far to the extreme on digital. And now they're putting their clients back into the center of all their endeavors,» Brunier said. At the same time, «some of the pure fintechs that were digital, are only now starting to build branches, offices, call center structures.»
For Brunier, the human element continues to be very important in banking, particularly given the tumultuous times currently buffeting financial markets. «As long as it is so unstable, there is more need for human interaction because a robot may not be able to advise you on scenario planning,» he said.
The Metaverse
Another area banks and financial services institutions are embracing is the metaverse. Speaking about a recent product launch, Brunier said the feedback was «phenomenal because finally we're given the technology which allows for a real, interactive, multi-dimensional environment. If done the right way with proper investments, it can be really attractive».
Sygnum Bank is one such institution using the metaverse to connect with its clients and will open a branch in New York's virtual Times Square, welcoming visitors with a «crypto punk.» According to experts, the first metaverse hub of a Swiss bank is likely to set a precedent, as finews.com reported.
Risks and Challenges
To be sure, there are risks that accompany such a fundamental change in how a firm adopts Cloud technology, not to mention cybersecurity risks, but the Cloud itself is not the issue.
«There continue to be corporate, regulatory, and reputational risk questions, but regulators are open to Cloud architectures. The risk does not so much lie in the technology itself. It's more a question of how it is architected and governed,» he said.
According to Swiss Federal Statistics Office data, there were over 30,000 crimes recorded last year which had a digital comment, a 24 percent increase over 2020. The Swiss Cyber Institute said earlier this year that a major shift is underway in how organizations accomplish tasks and are increasingly shifting to digital and cloud.
«It is no secret that for the rest of 2022 and years ahead, the cyber security landscape will continue to evolve and cyber-attacks will become more unrelenting. So, one thing is obvious: the pace of change in the cyber security sector will be brisk,» the statistics office said.
Brunier agreed. What previously may have been only the domain of the IT department, is no longer true given the increased attacks.
«Cybersecurity is not something that happens in the technology division of a bank. It's becoming a board-relevant topic,» he said.
