Data is critical to every financial institution; it is recognized as a core asset to drive customer growth and innovation. As the need to leverage data efficiently increases, however, the legacy technology that still underpins many organizations is not built to support today’s requirements. Not only is this infrastructure costly and complex, it doesn’t support the diversity of workloads and functions that modern applications require.
To overcome these challenges, organizations are increasingly adopting an integrated data platform that offers a seamless developer experience, runs anywhere, and scales to meet growing business needs.
To better understand how such data platforms are being used, MongoDB commissioned Forrester Consulting to survey global IT decision makers at financial services and fintech organizations.
In this article, we’ll share findings from the survey to help answer questions such as: What impact are legacy technologies having on financial services? What are the requirements for a data platform? And, for those already adopting next-generation data platforms, what benefits are they experiencing?
According to the survey, the majority of decision makers are aware of issues related to legacy technologies:
57% of respondents said that their legacy technology was too expensive and doesn’t fulfill the requirements of modern applications.
50% said legacy technology cannot support the volume, variety, and velocity of transactional data.
47% noted that their systems landscape struggled to handle the rate of change required to stay up to date with customer expectations.
Download the full study: What’s Driving Next-Generation Data Platform Adoption in Financial Services
What is a next-generation data platform?
Within the context of this study, a next-generation data platform is defined as supporting flexible and versatile data models, offering multiple access patterns (e.g., document, relational, graph), and catering to the speed, scale, performance, integration, and security needs of small or large organizations for new development or modernization efforts. All of these features are included in a single platform that delivers real-time, consistent, and trusted data to support a business.
Adoption of next-generation data platforms in the financial services and fintech space is already high, with nearly 90% of respondents saying they are already adopting. The benefits are already understood, with 74% of respondents acknowledging not only that there are technology benefits but also that a next-generation data platform frees up teams to focus on innovation and enables faster software builds and iterating at scale (76%).
The key to innovation - What's driving the adoption of next-gen data platforms?
Security and risk management are key use cases
Given the huge amount of confidential client and customer data that the financial services industry deals with on a daily basis — and the strict regulations — security must be of highest priority. The perceived value of this data also makes financial services organizations a primary target for data breaches.
Many organizations are still working to realize the full potential of adopting next-generation data platforms; however, it’s understood that such platforms are the only way to manage cost, maximize security, and continue to innovate.
Fraud protection (51%), risk management (46%) and anti-money laundering (46%) are high priorities for any new data platform, according to respondents. And, these findings directly correlate with 40% of respondents saying that their current database is unable to meet security requirements.
Multi-cloud is driving investment
Regardless of their size and business mix, most financial institutions have come to understand the benefits of cloud and multi-cloud services. Multi-cloud — the practice of leveraging cloud services from more than one provider — is no longer just a nice-to-have option.
Regulators, however, are increasingly focused on cloud concentration risk as so much of the technology underpinning global financial services relies on so few large cloud services providers. Regulators have so far offered financial institutions warnings and guidance rather than enacting new regulations, although they are increasingly focused on ensuring that the industry is considering plans. An outage or cyberattack at a large public cloud provider, they worry, could derail the global financial system.
Decision makers are finding that multiple clouds provide them with lower costs, higher performance, and greater flexibility. This is why, according to the survey, the top driver for investment for decision makers when adopting next-generation data platforms is multi/hybrid cloud capabilities (49%), followed by scalability (44%).
Improving real-time analytics capabilities
The ability to perform real-time analytics is key for financial institutions, as they need to provide more personalized customer experiences, react more quickly to market trends, and detect and prevent potential threats. With legacy systems, few of these organizations can respond to changes in data minute by minute or second by second.
Among survey respondents, real-time analytics was the top feature (54%) that organizations are interested in with regard to next-generation data platforms. With improved analytics capabilities, businesses can analyze any data in place and deliver insights in real time.
Legacy infrastructure is holding organizations back
To remain competitive and build experiences that retain customers, financial institutions need to master their data estate. Specifically, they need to free themselves from the rigid data architectures associated with legacy mainframes and monolithic enterprise banking applications. Only then can developers build high-quality customer-facing applications rather than maintain legacy systems.
High costs and data complexity are the top challenges driving organizations to modernize legacy workloads and unlock business agility. According to 57% of IT decision-makers questioned, legacy technology is too expensive and does not fulfill the requirements of modern applications. This correlates with 79% of respondents seeking a data platform that will address multiple workloads — ranging from transactional to analytical — as data continues to expand.
What is the impact?
Financial organizations use next-generation data platforms to replace legacy technologies that fragment and duplicate data and cause internal silos. This change also addresses key needs like reducing costs, lowering complexity, better onboarding for customers, and meeting security requirements.
Once in place, a next-generation data platform provides several advantages, including minimizing data inconsistencies (43%), expanding geographical coverage (42%), freeing up resources (40%), and reducing time-to-market for new ideas (37%). Other advantages include eliminating the impact of database downtime for upgrades, migrations, and schema changes. And, additional benefits can be seen within the customer and employee experience, as they engage with and access information.
Based on these benefits, financial services organizations are looking to increase investment in next-generation data platforms by an average of one million dollars or more in the next one to three years.
The volume and variety of data that financial services companies must deal with will only increase in the coming years. As such, figuring out how to leverage, protect, and innovate around that data will put organizations in good stead moving forward. A next-generation data platform can be the key to making this happen.
About the study
MongoDB commissioned Forrester Consulting to conduct a study questioning global IT decision makers at financial services and fintech organizations to evaluate the impact they are experiencing when adopting next-generation data platforms. The study evaluates the benefits, challenges, and barriers of adoption that decision makers are experiencing, as well as the outcomes after adoption.
To create this study, Forrester Consulting supplemented this research with custom survey questions asked of database/data platform strategy decision-makers in finserv (73%) or fintech (27%) from North America (22%), Europe (39%), and APAC (39%). The organizations questioned had 1,000+ employees. The custom survey began and was completed in September 2022.
Download the full study — What’s Driving Next-Generation Data Platform Adoption in Financial Services — to learn about organizations’ needs and plans for using next-generation data platforms.