By David Andrzek, Head of Financial Services, DataStax
There is an important and growing trend occurring in financial services business processes and practices that is upending the way banks build applications and manage data. Banking product leaders are demanding instant, responsive and personalized services, and technology leaders in banks need to quickly implement their “real-time data” strategy.
why? Because everywhere you look, time is exhausted from financial operations.
For example, stock and other investments were processed and settled within three days (T + 3 processing, in stock trading parlance), but in September 2017 the settlement was condensed to two days (T + 2). The industry is currently working on a T+1 settlement.
Credit card transactions seem fast at the terminal, but they are actually much slower than they look. Card transactions are only “authorized” in seconds; The actual payment settlement occurs after a day or two (or sometimes four!). Now, instant payments like Dedicated area for payment in euros only (SEPA) in Europe; the RTP . network From the US clearinghouse and the Federal Reserve FedNow . ServiceIt is fully settled with available funds in seconds.
If irrevocable payments are completely settled in seconds, then less than a second fraud detection and anti-money laundering checks will be necessary.
As competition in financial services intensifies, banks are shifting from product-centric to customer-centric businesses. This translates into personalizing the digital experience of the bank for a corporate treasurer or consumer in real time, providing the most up-to-date information to support financial decisions in real time.
For example, consumers want to know if they’ve exceeded their budget for the week or month before placing an order, and need an immediate credit decision at checkout to buy now and pay later. Also, fintech companies and some banks can now open accounts in a minute or less, which means Know Your Customer (KYC) processes should happen in seconds.
Instant Payments, Instant Settlement, Instant Fraud Check and Credit Decisions, Right Now KYC – There’s no time for time in banking anymore.
Ball and Legacy Series
Compare today’s market realities with the legacy of banking data operations, and you’ll understand the enormous challenge that technology teams face in banks. Processing of bank statements began in the era of the classic “banking hours”, when all banking was done in branches from nine in the morning until four in the morning. Scarce and expensive computational resources were allocated to branch operations during business hours.
Overnight, while the bank was closed, transactions were resolved and settled in the ledger and reports were generated to serve the business. Thus the historical solid foundation of banking operations is built on aggregate data processing and ETL. This “legacy” is the proverbial ball to the feet of bank engineering staff as they race to compete with fintech companies, tech giants and start-up banks.
Richer and smarter digital services in real time
Today, the bank is an app on your phone and is expected to be always available. As processing windows continue to shrink, leaders in financial services products are under pressure to offer customer journeys that can be completed end-to-end online and fully self-service.
This makes product leaders think about all the data that both the bank and the bank’s customers require to complete a task (for example, to open an account, approve a transaction, or make the decision to spend in the moment). Banking product leaders are thinking about how to integrate data sources from outside the bank into their services so that decisions can be made on the spot.
The product leaders who design these instant services cause the technology teams at banks to re-engineer their infrastructure for “instant” processing and decision-making. These technology teams modernize the bank’s infrastructure in part by building a “real-time data layer” on top of the underlying transaction systems. The real-time data layer combines capabilities to capture, transfer, transform, and make decisions in less than a second, and can accommodate both increased volume and data speed, while ensuring banking services are always available.
Take the Macquarie set. The Australian financial services company recognized that speed was key to differentiation in this brave new world, so they prioritized building a data infrastructure, Based on Apache Cassandra® It can leverage real-time data and build real-time interaction with its customers.
This real-time data strategy underpins this end-to-end modernization and digital strategy of the bank, enabling banking technology teams to deliver richer and smarter digital services by capturing more data and making it, including third-party data, readily available to developers via modern APIs. Developers build data-driven services for these “instant” applications, running algorithms that deliver instant decisions from fraud detection, credit approvals, payment processing, and more.
Competition and growing customer expectations for an always-on, instant service are driving bank leaders to think beyond just “big data” and implement real-time data strategies. With the pace of change in the industry, banks need real-time data capabilities, right now.