Data-Virtualization-Financial-Industry

Data Virtualization and the Transformation of the Financial Industry: An Interview with GFT, a Denodo Partner

Founded in the Black Forest in Germany in 1987, Gesellschaft für Technologietransfer (GFT) has grown to become a highly trusted, international consulting company focused on the financial industry. Now a trusted Denodo Partner, GFT is bringing the benefits of data virtualization to global banks and other financial institutions. Here, GFT answers questions about the role that data virtualization can play in this highly important sector.

When it comes to data integration, what are the main challenges your customers are facing?
In the financial services industry, the main challenges are the exponential increase in the amount of information banks need to manage and exploit in order to digitize key operations, the complexity of that data, the poor quality of that data together with the inconsistency of controls, and finally, compliance with new regulations, like the General Data Protection Regulation (GDPR).

Firms face all of these challenges when they look to integrate data more closely with their business, within existing timelines, and as integration costs continue to rise.

What are the technology trends for 2018 in the financial services sector?
We see the following trends:

  • Data is the future: Access to data, and the ability to mine data, will be central to everything that happens in the financial services industry for the foreseeable future. Now that firms have collected the data , and the toolsets to manipulate that data are understood and available, in 2018 we will see data being applied to operations and technology processes.
  • Banking regulations: 2018 will see a turning point in financial regulations. Alongside the GDPR and Markets in Financial Instruments Directive (MiFID II), the requirements for central clearing and the second Payment Service Directive (PSD2) will force significant changes on the banking environment.
  • Massive investments in digital transformation: Consumers’ experiences with non-banking industries such as retail and communications have shaped their expectations of banks. As customers become more digital-dependent, more demanding, and more tech-savvy, legacy bank infrastructure will strain to support these new modes of engagement and it will become difficult to grow their digital efforts appropriately. In response to increasing competitive pressures and rising expectations, financial institutions around the world will aggressively invest in digital transformation projects.
  • Cloud services driven by open APIs: Banks will increase their use of cloud technologies. Banks will feel the push to create more cloud-enabled business models in 2018, while the use of open APIs will continue to drive consumer applications to the cloud.
  • The rise of robots: Robotic process automation (RPA), which uses software robots or “bots” to mimic human activity, has the potential to unlock more value by freeing up employees to focus on value-added work – ultimately transforming the way the financial services sector operates. In 2018, we will begin to see how this affects data analytics and ultimately how organizations serve their clients. Replacing repetitive tasks with robotics and machine learning will be a game-changer for the industry.
  • The reality of blockchain: Distributed ledger technology will no longer be hypothetical. The opportunities are endless for financial services firms that invest in such technology, from reducing operational costs to improving efficiency.

Please name some companies you think are innovating and could therefore serve as reference points for other financial institutions.
From the point of view of innovation, we usually categorize banks into two groups.

Banks with innovation and disruption in their DNA make up the first group. Banks like O2 Banking, Fidor Bank, Atom Bank, N26, Moven, Simple, Revolut, and many others, sometimes called neobanks, fall into this category.

In the second group are the traditional banks that are adopting innovation and digitalization at different rates and with different degrees of intensity. If we look to the 2017 Best Digital Bank Awards, we can say that the innovative banks in this group might include Citibank, Wells Fargo, BBVA, mBank, Nordea, Yapi Kredi, TBC Bank, DBS, Samba, CIB, Bank Leumi, and National Commercial Bank.

In these first months of 2018, what kinds of projects are your customers focused on?
Banks have been focusing on developing projects that help them to address the new regulatory environment, such as complying with MiFID II, GDPR, and PSD2.

As for non-regulatory initiatives, most banks are revisiting the onboarding processes for individuals and corporate partners. They are also completely digitizing these processes, to avoid the need for anyone to visit physical branches.

Other relevant projects we’re seeing are the improvement or renewal of online channels (mobile- and Web-based), adopting more services like co-browsing and biometric signatures, or simply deploying new versions that leverage the latest technologies to deliver a better user experience.

Finally, working with new technologies as proofs-of-concept, banks are developing initiatives using blockchain, advanced BI, bots, and natural language processing (NLP).

What is the impact of digital transformation on financial services companies, and what role does data virtualization (DV) play in this context?
Data virtualization has a key role in artificial intelligence (AI), where data is the fuel. A key prerequisite for adopting AI, machine learning, and deep learning technologies, is for the data to be available and integrated from different sources in real time. For that capability, data virtualization is proving to be highly effective, especially when banks need to expand into other strategies, such as big data and data lakes.

How can data virtualization help financial services companies comply with GDPR?
Data virtualization can contribute to solving most of the requirements of GDPR.

We always begin by saying that the simple act of virtualizing data allows banks to avoid data replication. If the virtualized data is personal and/or sensitive, it is easy to see that, with data virtualization, the complexity of a GDPR implementation in an organization does not increase. Replacing current personal data replication by virtualization simplifies GDPR compliance for any bank.

Besides this immediate benefit, it is important to note that solutions like the Denodo Platform can easily contribute to personal data (PD) audit and monitoring with the use of DCO Dashboards. This enables PD control with defined, role-based data access, the management of consents by embedding checks on the existence of the appropriate consent into the process of retrieving the data, and the detailed lineage of the integrated data.

What are the major benefits that data virtualization offers to financial institutions?
Banks can gain substantial benefits from data virtualization in many areas, including cost reduction, agility in implementing projects where data integration is key, increased control over data and compliance despite increasingly strict regulations, increased data quality and consistency, and the easy implementation of 360-degree client views. I’m sure that data virtualization plays a role in many other data management areas involving in-depth needs analysis and issue resolution.

When did you learn about data virtualization, and why did you decide to partner with Denodo?
The first time that we knew that a client need could be relatively easily addressed with data virtualization was last year (2017) at IKN Revolution Banking, an annual banking event in Madrid, and we were specifically looking for a GDPR compliance solution. Conversations with Denodo started here.

From that time, we maintained continuous contact, exploring the best ways to collaborate in resolving the needs of banking and insurance clients. It was out of this collaboration that we decided that GFT should join the Denodo Partnership program.

Denodo and GFT are now partners in the implementation of data virtualization projects around the world. With the goal of improving customer service, we have certified several of our consultants in the development and administration of Denodo data virtualization solutions.

Jaume González

Jaume González

Jaume holds a Bachelor’s degree in chemistry and has completed a postgraduate course in Information Management Systems at CEPADE (UPM). He is an expert in delivering IT solutions in the banking sector, with 17 years of experience in investment products, wealth management, private banking and sales channels. He currently supports GFT customers with the transition of IT systems to digital banking.
Jaume González

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