The Evolving Financial Services Technology Stack Landscape

How is the Financial Services Technology Stack evolving and what does it mean for your organisation?

Why is the Financial Services Technology stack evolving so rapidly?

In today’s rapidly changing digital landscape, financial organisations are embracing innovative technologies which:

·       Enhance their operations.

·       Improve customer experiences.

·       Help them to stay ahead of the competition. 

The financial services technology stack refers to the collection of software, applications, and infrastructure that powers financial services organisations and it is undergoing a significant evolution. 

This blog explores the key trends and advances shaping the transformation of the financial services technology stack.

Which Financial Services Technology stack components are evolving and why?

Cloud Computing Technology stack component: Cloud computing has revolutionised the financial services industry by providing scalable, cost-effective, and secure infrastructure. Traditional on-premises systems are being replaced or augmented by cloud-based solutions including Infrastructure as a Service (IaaS) and Software as a Service (SaaS) solutions.

Cloud Computing Technology enables organisations to:

·       Optimise resource allocation.

·       Enhance data accessibility.

·       Increase operational agility.

·       Increase technology capacity in much smaller increments.

·       Optimise capital expenditure by using IaaS and SaaS to move capital expenditure to operational expenditure.

In summary, the cloud offers benefits such as flexibility, scalability, and improved disaster recovery capabilities, thereby empowering financial institutions to deliver services more efficiently and effectively.

Open Banking and APIs Technology stack component: Open Banking, driven by the implementation of Application Programming Interfaces (APIs), is revolutionising the financial services ecosystem. APIs allow secure and standardised data sharing between financial institutions and third-party providers. This enables customers to access a broader range of financial products and services from different providers through a single platform.

Amongst other things, Open Banking:

·       Encourages innovation.

·       Fosters competition

·       Enhances customer choice and experience. 

It also enables collaboration and partnerships between traditional financial institutions and fintech startups, leading to the creation of innovative products and services.

Blockchain and Distributed Ledger Technology (DLT) technology stack components: The Blockchain and distributed ledger technology (DLT) component is disrupting the financial services industry by offering enhanced security, transparency, and efficiency. These technologies enable:

·       Secure and immutable record-keeping.

·       Streamlining of processes such as cross-border payments, smart contracts, and identity verification. 

Blockchain-based platforms are facilitating faster, more secure transactions, reducing costs, and eliminating intermediaries. Financial institutions are exploring the potential of blockchain and DLT to transform various areas, including remittances, trade finance, and asset tokenisation.

Robotic Process Automation (RPA): Robotic Process Automation (RPA) is automating repetitive and rule-based tasks in the financial services sector and thereby improving operational efficiency and accuracy. 

RPA bots can handle and fully automate activities such as:

·       Data entry

·       Reconciliation

·       Compliance checks

·       Report generation.

RPA therefore frees up human resources for more complex and value-added tasks. Also, by automating manual processes, financial institutions can reduce costs, minimise errors, and enhance productivity.

The evolution of the financial services technology stack is driven by various technological advancements, including cloud computing, AI and ML, open banking, and APIs, blockchain and DLT, and RPA. These innovations are reshaping the way financial institutions operate, interact with customers, and deliver services. Embracing these advancements enables organizations to improve operational efficiency, enhance customer experiences, and gain a competitive edge in the digital era. As the landscape continues to evolve, financial institutions must stay proactive and adapt to the changing technology stack to thrive in the modern financial services industry.

In WiRD’s experience, technology stack innovation is one of the most important elements of differentiation and business growth in today’s Financial Services sector. What is your experience in this regard? How important is technology stack innovation to your organisation’s business goals? Please share your experiences with WiRD and each other by commenting or interacting on LinkedIn