CFPB / RegulatoryFintech

5 Ways fintech companies can achieve digital transformation in 2021

New technology, increasing regulation, and safety and security concerns are continuously changing customers’ expectations. Pressured by new legislation and the emergence of digital ecosystems and partnerships, value chains in the financial industry are unbundling fast as incumbents compete with fintechs across the entire financial services arena.

The deluge of data keeps increasing and digital transformation initiatives create intelligence gaps across not only the fintech industry but all industries. In order to successfully compete in this highly competitive and regulated market, fintechs need to know what happens throughout their business at all times so they can respond with speed and relevance. Getting real-time access to data around application performance is essential for developing business operations while keeping those services both secure and compliant.

To gain a competitive advantage, fintech companies must address these five requirements that drive increased complexity and data growth which can create intelligence gaps. Fintech companies focused on digital transformation must find a way to close these gaps in order to achieve digital business success.

Modern application architecture 

Componentized applications cause the first intelligence gap on the path to a modern application architecture, the first requirement for digital business success. Modern apps need new software architectures that can be assembled and reassembled in real-time, to build and deploy software faster and flexibly. Because workloads are broken down into smaller components and distributed across cloud environments, more complexity is created. With more components introduced, more systems and signals need to be managed and analyzed with context. In many cases, developers end up monitoring and troubleshooting the pipeline directly, which takes time away from working on critical revenue-driving application features and releases. This problem grows exponentially as DevOps teams start leveraging modern infrastructures like Kubernetes, AWS Lambda, and others to innovate new applications or update existing ones. Fintech companies need to look for ways that they can speed delivery of quality improvements and better manage their complex systems and services. 

Multi-cloud adoption 

The complexity of operating in a multi-cloud environment introduces a second intelligence gap. Credit unions and other financial organizations need the ability to run distributed application workloads across multiple cloud infrastructures to increase scalability, flexibility, and cost effectiveness. Yet, multi-cloud adoption drives digital sprawl due to siloed architectures and management tools that provide only partial views, do not operate in real-time, and are not scalable for cloud environments. These organizations need a unified view across the entire heterogeneous architecture in real-time, and across multiple use cases so they can diagnose and troubleshoot issues faster and reduce service interruptions.

Continuous security 

The complexity of securing a perimeter-less digital environment opens up a third intelligence gap, which may lure organizations into a false sense of security. As trusted custodians of customers’ accounts, data, telemetry direct or via ecosystem partners, fintech companies are entrusted with highly sensitive customer data that must be safeguarded at all times to preserve their status as institutions of trust. Organizations need the capability provided by artificial intelligence and machine learning technologies to thwart modern threats. Security complexity rises as the surface area of attack expands across a perimeter-less digital footprint, and fintechs often lack the skilled analysts and cloud-native tools needed to secure this new world and keep pace with the volume and sophistication of modern attacks while battling alert fatigue. Financial organizations should look for ways to automate and accelerate threat detection and response, and filter real threats from the noise. 

Continuous collaboration 

The fourth intelligence gap is caused by siloed data from disparate tools, preventing teams from collaborating effectively. Fintechs require the ability to provide contextual intelligence and insights across multiple use cases from a single source of truth to facilitate collaborative thinking and decision-making. Collaboration becomes more challenging as teams struggle with antiquated, siloed systems that present only a partial view of data and lack real-time context around what is happening across the organization. It is critical for fintech companies to fight off siloed approaches and embrace continuous collaboration for a multi-sided view of what’s going on with your data.

Data-driven intelligence 

Fintechs need the ability to extract real-time insights and business value from massive volumes of machine data generated in the form of logs, metrics, events, metadata, traces, and other telemetry. Overwhelming volumes of data continue to grow unabated and that leads to the fifth intelligence gap. While companies must store and secure the data, they are typically ill-equipped to extract value from it. Financial organizations must find a way to transform their data into real-time value that can contribute to business success and competitive advantage, addressing a variety of intelligence needs across multiple use cases. 

Fintech benefits 

By keeping a sharp eye on the five intelligence gaps, fintech organizations can work to reduce the time to detect, identify, and resolve operational and security issues in their fintech platforms. The benefits of doing so include: 

  • Ensuring a seamless user experience by centralizing monitoring for DevSecOps and reducing the time to identify and resolve issues in their platforms, and for the users themselves. Organizations must be able to analyze the massive number of logs and metrics applications produce and look for solutions that provide dashboards, alerts, and machine learning powered pattern detection to reduce troubleshooting time.
  • Accelerating application build and go-live cycles by providing reliability in the CI/CD pipeline. Organizations should be monitoring the reliability of code repositories, automation framework, and other parts of the pipeline to make sure engineering is focused on innovation rather than managing infrastructure.
  • Detecting and responding to security breaches faster, accelerate threat hunting, and eliminate alert fatigue for security analysts. Organizations must be able to analyze security events from AWS CloudTrail, AWS GuardDuty, and other sources and classify them by threat level to avoid missing key threats.
  • Ensuring continuous compliance. Monitor and automate compliance controls to help companies meet PCI/DSS, HIPAA, SOC2, and GDPR requirements and audits. Fintechs must also make sure they identify and deal with Personal Identifiable Information (PII) that is frequently mistakenly stored in logs.

The ability to harness real-time analytics and continuous intelligence across operations and security can support fintech business objectives as they compete against more traditional banks. In turn, teams can move quickly and adopt new technologies faster which means organizations can spend more of their time building services for their customers and less time managing their infrastructure.

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