As Covid-19 accelerated technology adoption and innovation across the continent – it also brought attention to the emergence of a first-of-its-kind dominant consumer – the digital native – a new “currency”. Businesses Scale: Digital Trust.
Rio Pinto | Image provided
As digital natives increasingly make up Africa’s consumer segment, their desire for instant gratification and a seamless digital experience will set the stage for what consumers expect from businesses in the coming years. The question now is, are businesses prepared for this newfound customer base?
In South Africa, we are witnessing the entry of digital players and the radical transformation of the banking sector into an unprecedented new level of innovation. With increasing customer demand for digital native transactions comes the integration of financial services with technology. In the past year alone, we’ve seen a significant increase in competition as we’ve seen three major branchless digital banks focus on innovation, digital transformation and improving the customer experience.
To deliver a truly frictionless experience, embedded in trust – financial services must be efficient, robust and secure. To do this, they must both embrace the power of the cloud, but also measure their approach to this journey. Mission-critical workloads, coupled with the massive amounts of data circulating in financial institutions’ environments at any given time, require exceptional computing power and scale, and coexistence with innovation.
In a highly regulated industry, the coexistence of compliance and innovation can be dubious, but when you’re locked into an open hybrid cloud strategy, they can push each other. Whether or not financial services get this right will determine whether they can gain and retain the trust of digital natives and maintain their competitive advantage over the next decade and beyond.
Here are the key principles the financial services industry should follow to overcome the digital native:
Keeping all your data in one place isn’t the key to success.
All information is not equal, and therefore not all information requires the same control and supervision. Organizations must decide what data should stay on-premises and which should migrate to the cloud – and why.
Currently, 10% of banking institutions’ workloads globally have migrated to the cloud, unnecessarily hampering their customer experience and overall business growth. With the right workloads in the right environment, businesses can see the most powerful results.
Financial services organizations need a solid foundation to propel them forward in the form of a modern core architecture. “Liberated” from legacy artifacts and reinvented with today’s mainframes built on real-time speed, security, and integrity. A foundation that can handle trillions of digital transactions without adding critical latency to tasks like enterprise AI.
By combining on-premises innovation with a hybrid cloud approach, financial services institutions can reap up to 5x more value than public cloud alone.
Vendor differentiation creates reliable innovation
While the declining school of thought promotes a single vendor approach as simple and controllable, it is actually expensive, narrow and complex, unable to meet the needs of the digital native customer. In fact, according to a recent IBM study, 77% of financial services firms surveyed in South Africa see supplier lock-in as a major obstacle to improving their business.
An organization cannot grow if it operates within the constraints of ownership chains, silos, and technology providers. It cannot adapt and innovate on its own terms, but instead must do so within the parameters set by its technology partners.
Being agile for business needs to rely on an interactive foundation – it needs to be diverse. This area cannot be found only on the forehead or in the clouds, but rather at the intersection of these two worlds. Where the integration of different infrastructures, technologies and applications can reliably meet an organization’s competitive objectives.
Security and privacy create trust.
Diversity is also the connective tissue between innovation, respect and safety. A diverse and open environment is a central design element for governance and regulatory compliance, and businesses can manage customer data without having to move it. One where security and compliance controls can be built into the core to seamlessly comply with regulatory requirements. The ability to run management and compliance tools across multiple clouds is essential to the success of financial institutions.
In addition, in the absence of firewalls, security can also be extensive, providing not only visibility of suspicious network activity, but also a rapid response to threats through AI. Privacy can be strengthened with cryptographic computing, a technology that is non-invasive and accessible only to the data owner – not even the cloud provider.
These three principles are the basis for financial institutions to win over digital natives. If the industry takes a single approach to its digital journey, it will remain largely stagnant. He may modernize to keep up, but he cannot innovate to prosper. Meeting the needs of tomorrow’s consumers requires financial institutions to embrace the best of both worlds – on-premises and in the cloud. Neither can deliver the new digital trust money alone.