Many consider regulations a bane to business. After all, can’t companies be trusted to do the right thing? Why behave foolishly or unlawfully if such actions endangered customers or investments? These points might seem reasonable to anyone not well acquainted with human foibles, but they can be harmful or dangerous when it comes to organizations that are vital to the wellbeing of individuals and communities, like banks and financial services.
In those cases, the value of industry and government regulations is clear. However, it’s worth asking a larger question: How can organizations following complex regulations also stay competitive and transform to address modern business requirements and opportunities? A new Censuswide study sponsored by IBM queried over 600 UK-based IT decision-makers and professionals in financial services, telecommunications and the public sector about how they view regulation, compliance, security and digital transformation. Let’s review the study’s findings.
Compliance-sensitive industries meet modern clouds
Drivers for conducting the survey included proposed new regulations, such as the European Commission’s Digital Operational Resilience Act (DORA) and the Bank of England’s Prudential Regulation Authority’s effort to seek more oversight of third-party cloud computing service providers. These are notable considering that a large majority of survey respondents have already adopted or plan to adopt hybrid multi-cloud IT architectures (87%) and have already adopted or plan to adopt industry-specific cloud platforms to accelerate digital transformation (88%).
The finding on industry-specific cloud platforms is particularly interesting since it bolsters the value proposition of established solutions, like IBM’s Cloud for Financial Services. However, it also highlights a key differentiator for industry specific clouds – they require vendors to have a thorough understanding of and affinity for customers’ existing and emerging business and regulatory needs.
That is no small thing in industries, like financial services where processes, regulations and compliance requirements vary substantially or even radically from country to country and between geographic regions. Plus, it is also where the importance of IBM’s position as a fully global enterprise, with operations in 171 countries, comes into play.
It is not simply that IBM is present in nearly 90% of the world’s 195 countries or that it has spent decades as a trusted IT vendor for many of the world’s largest financial institutions. It is that those widespread locales and years of experience have provided deep insights into financial customers’ businesses that few other vendors share, let alone equal.
It should also be noted that the company is actively building-out these solutions through both organic and external investments, including the acquisition of 15 companies in 2021 that will help IBM Consulting expand customers’ hybrid cloud and AI capabilities.
Compliance and security concerns meet industry-specific clouds
One of the more interesting points found in the survey results was a dichotomy about how security and compliance impact business modernization. A third (33%) of respondents cited security threat risks as drivers of IT transformation and nearly 9 in 10 (87%) said their organizations had invested or intended to invest in the latest enterprise grade cloud security and encryption solutions. Plus, 40% said that new regulations and compliance policies were acting as a catalyst for decision making and modernization projects.
But at the same time, substantial numbers of respondents considered digital security concerns (43%) and regulation and compliance requirements (45%) as the leading barriers to pursuing IT modernization. Similarly, nearly a quarter (22%) of participants noted that compliance concerns inhibited their companies from working with third party vendors, thus stifling access to potential innovations offered by category experts and consultants.
Do survey participants see a way to overcome these challenges and barriers? Absolutely. Almost half (49%) said that platforms featuring integrated, automated regulatory compliance controls designed for their specific industries would help accelerate innovation the most. That underscores responses of the 88% who said that their organizations were either using or planning to use industry-specific cloud platforms.
While the value of industry-specific platforms and hybrid clouds were prominently underscored in the Censuswide survey results, they were not the only technologies that respondents valued. For example, almost half (46%) of participants in financial services plan to use artificial intelligence (AI) and data analytics to speed modernization over the next five years. Plus, nearly as many (41%) are planning to expand their use of AI solutions to personalize and enhance customer service.
For these and other emerging offerings, robust hybrid multicloud platforms and industry-specific solutions will provide elemental foundations. As Howard Boville, SVP of IBM Cloud noted in the survey announcement, “Highly regulated industries are feeling pressure to transform with an ever-increasing rate and pace. But they must not move security, resiliency and compliance to the backburner on their mission to modernize. This is especially critical for financial services, telecommunications and government, where regulations are changing rapidly as exposure to cyberthreats have escalated to unprecedented levels.”
Overall, IBM appears well-positioned to develop and deliver innovative solutions designed specifically for banks and financial services, as well as organizations in other highly regulated industries.