In an earlier post, we discussed the drivers behind the move to cloud and managed services in financial services. We now focus on the benefits, looking at our experience with a large bank.
The benefits of managed services can be categorized into four main areas:
- Efficiency for IT operations: The managed service model compensates for any understaffing or lack of skills in IT operations, while at the same time freeing up IT staff to work on more strategic and value-added projects.
- Security and reliability: Typically, managed services have best-practice security and compliance built in and allow for proactive maintenance that can deal with issues before they impact operations.
- Innovation: Financial firms have better access to the new technologies on which new and enhanced service offerings can be built.
- Cost effectiveness: As well as the ability to shift from a capex to an opex model, managed services allow for more predictable and manageable pricing and costs.
These benefits are proving to be key drivers for banks, enabling them to innovate and transform at a low risk with a vendor that they trust, becoming a driving force for their evolution.
We worked with a major regional bank, implementing Fusion Managed Services to guide them to the cloud; boosting efficiency, accelerating agility and innovation and reducing total cost of ownership. Despite the COVID-19 situation, they have been automatically able to operate remotely, with teams structured to manage business continuity and all staff having secure remote access. As their managed services vendor, we’re able to work with them as if we were onsite. The bank also has multiple secure access points allowing failover for added resilience. For this client, the crisis reinforced how managed services and cloud delivery can provide an ideal combination of seamless architecture and easy access for remote users.
In the long-term, the shift in responsibility and relationship that comes with managed service and cloud implementation can also have many benefits for clients. In the on-premise model, it remains the bank’s responsibility for driving and managing software. But with a managed service relationship, banks often choose to have the operation of the service the vendor’s responsibility. The shift is from a transactional relationship to a partnership, in which vendor and bank have a shared interest in ensuring the right architecture, services and processes are in place.
On average, managed service relationships give around five to seven year horizons, bringing a much deeper and consistent resourcing than if the bank was merely purchasing software licenses from their vendor. Standardization is a further important benefit. On-premise systems tend to be harder to manage and difficult to change. While customization is possible in managed service deployments, it tends to be at a lower and more manageable level, with standard integration and best practice deployment and configuration models encouraged, offering significant cost benefits that are attractive to many clients considering the move.
Embarking on the managed services journey – What’s next?
There are several things that banks need to take into consideration when looking to implement a managed services model:
- First, think about the requirements for migration from an on-premise to a hosted model – at the very least, develop a good understanding of the data that is going to move. It’s also important to bear in mind that the goal is to simplify both architecture and integration. The aim is typically to streamline integrations, moving from multiple point-to-point integrations to a services-based integration paradigm. The regional bank example discussed here had 120 point-to-point integrations before its shift to managed services: its current architecture is significantly easier to maintain and modify, now with less than 25 services supporting its key data flows.
- Second, minimize the entry and exit points for data. Once hosting customer data, managed service providers can focus on security and logging, simplifying the solution and providing heightened audit controls, reconciliations, user authentication and customer reporting. This keeps overall access as tight and as restricted as possible.
- Finally, be ready for a change of mindset. Managed services are more of a partnership than a traditional software vendor relationship. Your partner will need to be on the internal boards responsible for pushing the change through and will also need to understand operational processes in depth. In cases where you provider owns the software assets and the service – they will take ownership of much of the risk in addition to the software and service. In truly successful models, your partner will be embedded into your project and operations to provide complete support and guidance to achieve your desired outcomes.
Managed services enable banks to move to cloud and integrate operations seamlessly and with minimized risk. They also present many key advantages that can provide a springboard from which banks can transform, innovate and future-proof. To find out more about Fusion Managed Services, click here.
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