#Digital transformation
#Core Banking

Integrating AI, cybersecurity and the cloud into IT systems

Jun 03, 2022 - 4 min read
Also Available in : Français
Samuel Durand, Mainframe and IT transformation expert at Sopra Banking Software

In a constantly changing world, financial institutions must respond to a growing list of challenges, such as the increasing demand for a cutting-edge customer experience, new digital expectations, the fight against multi-faceted cybercrime, and the migration of services and applications to the cloud.

To cope with these changes, banks and financial institutions must integrate new technological building blocks into their IT systems. For large legacy banks and financial services incumbents, these digital solutions are a major asset that will allow them to gain a competitive advantage – something increasingly important among the growing number of new industry entrants.

Among these solutions, three deserve particular attention: artificial intelligence, cyber resilience and hybrid cloud.

Artificial Intelligence

Artificial Intelligence (AI) and machine learning (ML) enable banking systems to process large volumes of data faster, shorten processes and increase productivity.

Beyond the obvious time-saving factors, we can identify three areas of improvement that versatile AI platforms offer to banks and financial institutions:

  • AI enables rapid adaptation to compliance requirements and changing regulations that can sometimes disrupt an entire part of the financial system, as was the case with the reforms framing open banking
  • AI improves the end-customer experience of financial institutions. This includes compliance testing to prevent account takeover and identity theft, rewarding customers, providing access to wealth management services with predictive models, predicting interest rates, and faster processing and evaluation of loans
  • AI also enables banking business processes to be optimized, automated and digitized. Since these processes rely on a multitude of individuals, applications and teams, automating the monitoring of these processes can make them more efficient.

Cybersecurity

As the rate of cybercrime increases, protecting financial services customers is more important than ever. The challenge is to protect both data and IT systems as new digital use cases – contactless payments, online banking, etc. – create new risks. Cybercrime is constantly innovating and developing, forcing organizations to continuously find new ways to counter these attacks. If protection requires a set of rules and good practices in the use cases, it also requires a constant and ever-evolving understanding of new digital tools.

The other side of cybersecurity is regulatory compliance. It is crucial that the banking sector is secure, well protected and adaptable enough to adjust to industry changes while also continuing to ensure regulatory compliance at every stage of the digital transformation journey.

Cloud hybridization

The majority of banking and financial institutions already use cloud technologies in some form or another. But to put digital transformation into practice in the most effective way possible, and to reap the benefits of cloud tools without creating delays between systems, it is now possible to use a hybrid model, between private and public cloud, or between cloud and pre-existing ecosystems

In this way, from the cloud, players can interact, control and monitor existing systems, while adding more modern applications that meet the needs of regulators or customers. This allows banks to optimize data in real time, keep costs down and improve resiliency in the event of an outage, all while ensuring continuity and consistency of service.

This hybrid model has several advantages, outlined below:

  • The hybrid cloud enables scalability: banks can optimize the data they need, avoiding unnecessary digital storage costs while gaining efficiency. At the same time, it ensures the continuity of functionality and performance, regardless of the volume of demand. This load flexibility helps improve the customer experience
  • The hybrid cloud is a vehicle for innovation and strengthens financial risk management capabilities and the fight against cybercrime, by not being limited to one geographical location
  • It also enables the portability of workloads, which are unified, integrated, orchestrated and generated via cloud tools and technologies.

Artificial intelligence, cybersecurity and hybrid cloud act as three drivers of innovation, efficiency and security for the banking industry. These technologies provide financial institutions with the tools they need to adapt to new needs, new regulations and, indeed, new threats.

The IBM z16 platform enables AI and cybersecurity to be integrated into a financial institution’s hybrid cloud models, driving modernization and digital transformation with minimal risk.

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