IT services management for financial services

Technology plays a critical part in shaping the financial industry, as they face the constant need to create faster and more efficient services for their customers. Realizing the value of IT services management for financial services, organizations are rapidly adopting modern technologies. IT services play a critical role in the financial sector for various reasons including the exchange of information. With technologies like the cloud, artificial intelligence (AI), machine learning (ML), and the Internet of Things (IoT), financial services get smarter and more efficient than ever. Technologies pave the way for more customer-centric banking. But what is IT service management (ITSM), and how does it play a critical role in powering the financial industry?

Roots of the problem

To learn how technology helps banks achieve their goals, it’s important to understand their root cause. The perfect composure of a successful banking system consists of a mix of expenditure, roles, and talent. Banks that found the ideal proportion made the most of the tech budgets, while the others struggled to meet their expectations. But what is the role of IT service management?

A bank with legacy infrastructure usually struggles to keep up with the pace of the fast-evolving world. While adopting new modern technologies, banks employ fewer engineers and focus on handling people management, orchestration, administrative tasks, and low-value operations. To add fuel to the fire, the majority of the engineers to create business solutions are either novices or advanced beginners, lacking the experience to handle challenging situations. This pattern is more common among banks that combine with tech partners who offer contracts of lesser monetary value than success stories.

Top-performing banks spend less on IT compliances and more on value generation. They hire more experienced developers and engineers and fewer orchestrators and managers. 

Leading banks find the perfect mix of expenditure, roles, and talent to march ahead in the market.

A wave of change

Changes in the operating model and the wide adoption of new banking technologies like the cloud amplify the digital transformation of financial services. As the banking industry moves towards automation, organizations look to hire the right talent and rebalance their engineering workforce. With the adoption of a platform-oriented cloud infrastructure, the financial institution pulls the triggers of change.

Joint business/IT working model

Financial organizations rely on permanent central functions that control the processes and convene the workforce who are in silos for IT operations. Leading banks take a different route. Efficient IT service management for the financial sector allows organizations to follow the agile methodology and are directly responsible for products or customer results. Banks are moving away from manual procedures and are focusing on DevOps strategies in a highly automated environment. DevOps environment combines IT with operations, freeing up the workforce while cutting down risks and manual errors.

Platform-oriented architecture

Most banks use multiple IT applications, resulting in more risks and inefficiencies. The applications might have duplicate functionalities for different channels, products, or elements, which increases the complexity of the application and could cost more. Resolving the issue can be hard as the legacy system consists of various components for extensibility. Expanding the functionality of the application is not a piece of cake.

Most successful banks adopt a platform infrastructure that is both extensible and productized. Developers can meet new features or governing policies with minimal effort than previous versions.

Specialized talents

As new banking technologies come, financial institutions must rethink their HR models. Some banks adopt IT service management from tech partners, ensuring they get the best talents. Think of ways to get more employee engagement and retention. While in-house developers are great, outsourcing your IT service management frees your time to work on more critical business aspects.

Automated infrastructure with the public cloud

Banks are now migrating to the cloud infrastructure, shifting their data from physical hardware to the public cloud. While the focus shifted toward cloud computing, engineers prepared for the cloud and accelerated their banking operations while reducing the non-engineering roles to run a financial organization.

Targeted analytics tools

Advanced analytics are now a part of every business, helping them understand operational risks more efficiently, find and fix errors before they occur, and help the organization make more informed decisions. Whether it’s for security, financial service processing, data, or other tasks, the value of advanced analytics remains high. Here are some of the applications of analytics in the banking sector.

Anti-money laundering

Machine learning (ML) algorithms replace rules-driven models to prevent false positives and focus resources on issues that require investigation.

Conduct risks analytics

AI and ML, analytic engines identifies dubious sales patterns by connecting the dots across sales, product use, incentives, and consumer complaints. Analytics can help a bank identify risks related to trading by learning the mining and communication patterns.

Cyber risks

ML can identify potential cyber threats by analyzing source signals and replacing the existing rule-based system with a more advanced one.

Characteristics of tech-led banking operations

Technology powers banks in making their financial services and operations more efficient. The banks are continuously evolving, understanding their customers’ needs and pivoting their functioning accordingly. Here are a few characteristics of future-ready banks.

Extensive use of automation

AI and automation are now a part of almost all industries, including the financial sector. The benefits of automation extend beyond the bank, even improving the customer experience. For example, automating the document approval process makes the loan approval or closure procedure more rapid and convenient. AI can also improve customer service and dispute resolution. A consumer can contact the bank via multiple channels, and the AI-powered bots can perform an instant evaluation of the issue to provide solutions.

Personalization in products and services

Personalization plays a critical role in maintaining customer satisfaction. Today, most banks offer hardcoded services and offer travel rewards with credit card purchases, mortgages, and others. Banks automate the processes and bring flexibility and customization to their services, aided by AI and ML. For instance, an automated reward system can understand the user’s spending habits and offer them cashback or discounts from specific retailers or airlines.

Analytics to aid proactive management

The implementation of predictive analytics helps the bank improve the proactive management of its operations in several ways. With informed data and insights, ITSM with analytics helps banks make accurate predictions. Analytics studies customer behavior as per their interactions at granular levels. Moreover, with predictive analytics in the play, the bank can find errors and fix them before they occur, thus saving time and money.

Seamless business operations

A bank processes thousands of similar operations every day, including debit/credit card transactions, processing loan applications, and resolving customer disputes, among others. Introducing automation means that human efforts are cut short, as the ML algorithm assists in decision-making. Employees can focus on more complex tasks that need human intervention.

Eliminating silos

Traditional banking processes function in a trinity. There are front offices (branches), middle offices (call centers), and back offices (backbone operations team) that perform in unison. With the introduction of AI bots, call centers will require a lesser workforce and decrease eventually. Branches will diminish and transform in function. Technology will eliminate silos and bring a whole new horizon to banking.

Conclusion

Technology is revolutionizing every industry, with the banking sector no different. The importance of IT service management in the finance industry is gaining prominence, evolving how banks perform. Want to know more about how IT service management can benefit your financial initiatives? Let’s talk to take a step further.