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The Financial Services industry is largely considered a driver of global economy, and with good reason. Global and national economies spanning construction and engineering, mining and resources, retail, transportation and logistics, public services and many more rise and fall on the strength of their financial services industries. With the advent of technology and the rise and rise of data, now more than ever financial services institutions are required to store and exploit data (theirs and everyone else’s) for maximum value.
With many parts of the world still reeling from the not so recent global financial crisis of 2008 and the disruption of major industries such as transportation with Uber and telecommunications with OTT services such as Whatsapp, everyone expects the banking and financial services industry to be the next target of major disruption. There is consensus regarding the top 10 challenges facing financial services companies in 2016. This is the list in no particular order:
#1: Macroeconomic risk: detailing uncertainties in the macroeconomic environment together with persistent and high levels of debt across sovereign, corporate, and consumer sectors.
#2: Regulation: citing tightening regulatory requirements as sometimes costly, excessive, and ineffective, especially concerns about the volume and complexity of current regulation which were stated to eat into management time and overall industry margins.
#3: Political interference: detailing concern that governments could intervene in banking operations for a multitude of reasons, including to raise revenues in a time of budget stress, increase investor protection, and rebuild the national tax base.
#4: Technology risk: the risk that banks will fail to keep up with technological change, citing outdated core IT systems as a significant concern for global bankers. Failure to invest appropriately in secure, agile systems that can enhance digital and mobile banking can result in significant loss while compounding the risk for cyber attacks. Globally, the burden of multiple and siloed legacy systems due to a history of mergers is already causing real problems. Add to that competition from a host of disruptive FinTech innovators who are able to provide customers with seamless and more affordable experiences across a variety of channels.
#5: Profitability: citing banks and financial institutions still are not making enough return on investment, or the return on equity, that shareholders require.
#6: Consumer expectations: citing customer experience, and many banks feeling the pressure because they are not delivering the level of service that consumers are demanding, especially in regards to technology.
#7: Increasing competition from FinTech companies: usually start-ups without the aged systems and models that contemporary financial services companies are burdened with who use software to provide financial services.
#8: Criminality: citing increasing cyber crime, data theft, money laundering, tax evasion and fraud targeting banking and financial services customers and firms
#9: Social media: the rising threat to bank reputations from popular electronic networks such as Twitter, Facebook, etc
#10: Quality of Risk Management: citing the risk that banks will incur losses due to inadequate risk management
According to the CSFI/PwC study, ” The sharpest rise in concern in 2015 was about criminality (including the risks to banks in areas such as money laundering, tax evasion and cyber attack) which rose from No. 9 in 2014 to No. 2 in 2015. This risk coupled with continued concern on technology risk (No. 4) where under-investment and obsolescence, as well as the boom in new “fintech” present major challenges to banks” (Banking Banana Skins 2015: Centre for the Study of Financial Innovation The CSFI survey of bank risk)
Much study (sorry, citations not required!) has shown that organizations face more threats, in number and scale of damage, from internal rather than external sources. Privileged users abusing trust and authority rather than external hackers have proven to be real sources of concern and such threats are not addressed by network honeypots and firewalls and possibly other layers.
Technical solutions to these challenges will play in the sphere of business agility, security, innovating with speed and astoundingly engaging customer experiences. In a business context, agility is the ability of an organization to rapidly adapt to market and environmental changes in productive and cost-effective ways. In the era of data, organisations must repeatedly generate and test ideas, identify ways to capitalize or profit from these ideas, swiftly respond to business/customer/market feedback and move on to the next idea.
Considering that 20 of the top 20 banking and financial services firms run on the Oracle database, and with the now quite aged launch of the Oracle 12c Database, perhaps it is necessary to try to address 5 (in no particular order) of the top new features of this product that financial services companies MUST deploy to address the challenges of that industry in 2016. So here goes:
#1: Data Redaction
Available since the original release 18.104.22.168 in 2013, this new database security feature is part of Oracle Advanced Security and prevents data columns or parts thereof, such as credit card numbers, U.S. Social Security numbers, and other sensitive or regulated data from being displayed to users. Redaction is policy driven and can take into account database session factors such as username, IP addresses, application contexts and information passed by applications. Sensitive display data can be redacted at run-time on live production systems with minimal disruption to running applications and without altering the actual data stored in database tables. Different types of redaction are supported including full, partial, random, and regular expression redaction. You can conceal entire data values or redact only part of the value. The functionality is implemented inside of the database, therefore separate installation is not required.
#2: Privilege Analysis
The least privilege principle cites that administrators and users must be given the minimum access and authorization required for the carrying out of their functions, and no more. The challenge until now has been identifying correctly what privileges, of those granted, are actually being actively used. Privilege analysis supports the least privilege principle and helps to identify privilege usage – which privileges are actually being used and which are unused, and need to be revoked. So gone be the days of blanket privileges – 12c privilege analysis will ensure that privilege and roles are built for purpose and tracked for use. Privilege analysis requires the separately licensed Oracle Database Vault. Hopefully that will change soon and be available for use without the additional license costs.
#3: Multitenant – Consolidation & Cost containment
Multitenancy is not entirely new but this architecture is new in Oracle Database 12c Release 1 (12.1). Multitenancy addresses doing much more with less and helps drive consolidation and cost containment. You have the parent container database or CDB, and the children pluggable databases or PDBs. You can have many PDBs inside a single Oracle Database occurrence. PDBs share resources (memory and background processes) with the CDB.
The multitenant option increases agility and reduced cost by allowing fast provisioning of a new database or of a copy of an existing database, as well as fast redeployment by unplug and plug, of an existing database to a new platform or environment. Because binaries and instances are shared, several Oracle databases can be patched or upgraded in the time it takes for a single database. The multitenant option allows a single machine run more database instances in the form of PDBs than as individual, monolithic databases. This typically improves utilization and delivers the most bang for the buck.
#4: Masking & Subsetting (Test Data Management)
The days of taking a waterfall approach to application development and delivery are gone. Innovation requires agility, but new products need to be tested continuously and exhaustively or incur reputation damage. When performing real-world testing, there is a risk of exposing sensitive data to non-production users in a test environment. The test data management features of Oracle Database 12c help minimize this risk by enabling you to perform data masking and data subsetting on the test data. Database 12c supports masking and subsetting in a staging database for heterogeneous environments or during export. This new feature (masking and subsetting during export) reduces the time to avail a test environment quite significantly.
Data Masking and Subsetting Pack are licensed for Oracle Enterprise Manager and help organizations comply with data privacy and protection mandates that restrict the use of actual customer data.
Banking & Financial Services companies in 2016 must be agile. To survive and thrive, they need to innovate with speed and precision. Today’s customers are highly demanding and less forgiving. They expect to find information and purchase products at any time and from any location quickly and correctly. Financial services firms must adapt and deliver quickly, or die. They must do this cost-effectively. Such responsiveness to customer needs requires business agility. In 2016, this requires a change in how IT manages its service portfolio and the supporting infrastructure. Banks need to emerge as service platforms leveraging technology for strong, engaging and rewarding customer experiences, which translate into profit.
As organizations embrace the cloud, they seek technologies that will transform business and improve their overall operational agility and effectiveness. Oracle Database 12c is designed to meet these needs. By plugging into the cloud with Oracle Database 12c, financial services firms can improve the quality and performance of applications, deploy new service based business models with speed assuring faster time to market, faster innovation, increased flexibility and efficiency and above all faster adaptation.
Financial Services firms must swiftly architect migration to the cloud, or watch their cheese move!