# Why finance organisations must transform fast to fend off competition Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-05-10 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: Why Financial Service Enterprises Need IT Transformation Meta Description: Discover why 42% of financial service enterprises in the UK believe they need to transform their IT infrastructure to stay competitive. Learn more with URL: https://financedigest.com/why-finance-organisations-must-transform-fast-to-fend-off-competitionhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1304484797-1736815756680-compressed.jpg) ![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/3-da-38-450x673-1736815756689-compressed.jpg) _By_ **_Mark White,_** _Senior Manager – Financial Markets and Fintech,_ [_Telehouse Europe_](http://www.telehouse.net/) Banking and financial service enterprises increasingly understand that to achieve their business objectives and stay ahead of the competition, they need to focus on providing the best customer experience and on driving operational efficiencies, Unfortunately, for many that is difficult to achieve. Traditional incumbent banks and [financial institutions](https://www.financedigest.com/3-ways-financial-institutionscan-leverage-live-engagement-on-social-media.html "3 ways financial institutions can leverage Live Engagement on social media"), in particular, often don’t have the right systems in place to manage, or effectively use data to respond as quickly to market changes or customer needs as their ‘digitally native’ peers, including challenger banks and ambitious fintechs. According to [research from Telehouse Europe](https://www.telehouse.net/connected-future/), surveying the views of 250 UK enterprise IT decision-makers in across multiple industries, 42% of financial service enterprises believe they need to transform their IT infrastructure or risk becoming less competitive – a figure significantly higher than the 34% average across the other sectors polled. Pressure on [financial services](https://www.financedigest.com/4-ways-high-performance-analytics-powers-financial-services.html "4 ways high-performance analytics powers financial services") is being driven by a range of factors, including customer demands for more connected, relevant and personalised experiences; the need to simplify business and operating models to increase efficiency and the necessity to deliver new applications and services to customers/ **Assessing the challenge** It is clear [financial services firms](https://www.financedigest.com/turning-a-blind-eye-wont-work-for-financial-firms-as-the-fca-tightens-its-grip.html "TURNING A BLIND EYE WON’T WORK FOR FINANCIAL FIRMS AS THE FCA TIGHTENS ITS GRIP") have a need for transformation, however, the path to get there isn’t always simple. And many businesses are still too reliant on inflexible, legacy on-premise infrastructure which is hampering progress. According to the research, [financial service](https://www.financedigest.com/the-future-of-financial-services-tech-evolution-not-revolution.html "The future of financial services: Tech evolution not revolution ") enterprises have the lowest amount of IT infrastructure currently outsourced in colocation and the cloud. So, it is not surprising that finance firms also have the lowest confidence levels in IT maturity of all the surveyed industries, with less than a third of IT decision-makers describing their IT maturity as very advanced. Delivering transformation in the [financial services sector](https://www.financedigest.com/boom-or-bust-how-the-financial-services-sector-is-coping.html " Boom or Bust: how the financial services sector is coping") has historically been very difficult. Financial services firms have struggled to adopt new technologies and meet [growing customer expectations quickly](https://www.financedigest.com/4-strategies-for-quickly-growing-your-startup.html "4 Strategies for Quickly Growing Your Startup"), often limited by strict compliance and regulatory requirements, which ramped up after the financial crisis of 2008.  There is no doubt that the Covid-19 pandemic has accelerated [digital transformation](https://www.financedigest.com/3-reasons-why-businesses-get-stuck-at-the-starting-gate-of-digital-transformation.html "3 Reasons Why Businesses Get Stuck At The Starting Gate Of Digital Transformation") in the financial services sector, especially with many employees moving to remote work and many customers moving to digital modes of payment. But with the pressure of time bearing down and the need to deliver personalised, connected, and reliable experiences an ever-urgent concern, no [financial services firm can afford](https://www.financedigest.com/as-hackers-declare-cyberwarfare-financial-services-cannot-afford-to-be-complacent.html "As hackers declare cyberwarfare, financial services cannot afford to be complacent") to stand still. Having a robust infrastructure strategy in place is essential for the [finance sector](https://www.financedigest.com/why-the-finance-sector-must-prioritise-mobile-security-over-innovation.html "Why the finance sector must prioritise mobile security over innovation") to improve efficiency, productivity and competitive edge. **Why enhanced connectivity matters** As customer demand and internet consumption levels accelerate, the [financial services sector must](https://www.financedigest.com/the-financial-sector-must-act-to-tackle-internal-data-security.html "THE FINANCIAL SECTOR MUST ACT TO TACKLE INTERNAL DATA SECURITY") focus on enhancing connectivity between offices and countries as well as strengthening the user interface on customer-focused technology like websites and apps. In this context, the advent of 5G is having a significant impact, delivering a raft of benefits for [financial services firms](https://www.financedigest.com/top-north-east-financial-adviser-firm-talks-corporation-tax.html "Top North East financial adviser firm talks corporation tax") including reduced latency, which will in turn help decrease transaction and settlement times. Growing uptake of advanced AI will also enable firms to keep up with their nimble fintech rivals in delivering the kinds of improvements in the user experience that customers are increasingly crying out for. All this activity will, however, inevitably lead to a [rise in data](https://www.financedigest.com/dollar-slips-after-upbeat-china-data-euro-pound-rise.html "Dollar slips after upbeat China data; euro, pound rise") volumes which in turn will put more pressure on backbone networks.  According to the survey, one-fifth of IT decision-makers from [financial service firms already say that data volumes have become a serious problem](https://www.financedigest.com/disconnected-customers-are-one-of-the-biggest-problems-facing-financial-companies.html "Disconnected customers are one of the biggest problems facing financial companies"). To succeed, [organisations must rapidly ingest and process data](https://www.financedigest.com/auditing-in-cyber-how-organisations-can-keep-track-of-their-data.html "AUDITING IN CYBER: HOW ORGANISATIONS CAN KEEP TRACK OF THEIR DATA") and this depends on having a connected, secure, scalable, flexible, resilient and low latency IT infrastructure. Ultimately, though, more connections means more risks. So, the challenge is how to take advantage of increased connectivity without compromising security or compliance. **The role of colocation** Many firms are now turning to colocation to deliver the extra capacity and bandwidth required, while also facilitating fast, [secure and direct connections to cloud service](https://www.financedigest.com/how-financial-services-are-overhauling-security-to-defend-against-spoofing-scams.html "How financial services are overhauling security to defend against spoofing scams") providers. Currently the finance [sector is outsourcing 38% of IT infrastructure](https://www.financedigest.com/invest-in-infrastructure-to-escape-the-starvation-cycle-warns-leading-nonprofit-sector-strategist.html "Invest In Infrastructure To Escape The ‘Starvation Cycle’, Warns Leading Nonprofit Sector Strategist") in colocation, however, the research suggests this is expected to increase to 42% by 2026. While behind other sectors, this trend is likely to likely to be driven by rising data volumes and the impact of the pandemic. In the longer term, we would expect the adoption of colocation to continue to grow also, particularly because of the huge potential for applications around [big data](https://www.financedigest.com/big-data-suggests-leicesters-football-success-could-usher-in-economic-boom.html "Big data suggests Leicester’s football success could usher in economic boom") and 5G networks and IoT. By hosting their IT infrastructure in a colocation data centre, firms can control the migration process, stay on top of regulatory demands, and keep a lid on costs. [The top drivers of investment](https://www.financedigest.com/5-top-tips-in-investing-on-diamonds.html "5 Top tips in Investing on Diamonds") in colocation are sustainability, faster data access and improved connectivity, likely driven by the requirement to improve customer experience and connect disparate hybrid IT structures. More important, by implementing a mix of cloud and colocation strategies, [financial services](https://www.financedigest.com/data-fake-will-be-the-new-real-in-financial-services-in-2023.html "Data: Fake will be the new real in financial services in 2023") firms can create a resilient, secure foundation for growth. This will allow them to flex and scale operations when developing innovative offerings to meet future demand, while also providing customers with a responsive, high-performing service. And by choosing a colocation facility near to financial markets and exchanges, [organisations also reap the rewards of reduced latency and faster data processing to facilitate real-time big](https://www.financedigest.com/avoiding-a-big-data-car-crash-how-to-organise-your-data-to-detect-fraudulent-claims.html "Avoiding a big data car crash: How to organise your data to detect fraudulent claims") data analysis. **The edge opportunity** Despite lagging behind in other areas of digital transformation, the finance sector, along with healthcare is [leading the way](https://www.financedigest.com/customer-engagement-whos-leading-the-way.html "Customer engagement – who’s leading the way?") when it comes to edge implementation, with 72% of those polled having deployed an edge strategy. This is driven by the need to optimise data volumes, match competitor capabilities and [digitally transform](https://www.financedigest.com/5-key-takeaways-from-the-finance-sectors-digital-transformation-revolution.html "5 Key Takeaways From the Finance Sector’s Digital Transformation Revolution"). Given that it’s now increasingly important for [financial services](https://www.financedigest.com/how-financial-services-companies-can-successfully-utilise-low-code-and-no-code-technologies.html "How financial services companies can successfully utilise low-code and no-code technologies") firms to store, access and analyse large data volumes at record speeds, growing intertest in edge computing is understandable. Gartner predicts that by 2025, 85% of infrastructure strategies will integrate on-premises, colocation, cloud and edge delivery options, compared with 20% in 2020. Successful edge strategies are underpinned by colocation and cloud services, both of which are key building blocks. Ultimately, the [key for success for financial](https://www.financedigest.com/4-key-financial-trends-as-we-approach-2021.html "4 Key Financial Trends as we Approach 2021") services firms will be building the right infrastructure foundations and connectivity, and the right data centre partner is critical to achieving this. **[Digital transformation](https://www.financedigest.com/redefining-the-human-touch-with-data-driven-digital-transformation.html "Redefining the human touch with data-driven digital transformation") matters** The [financial services](https://www.financedigest.com/devops-the-secret-tool-thats-transforming-financial-services.html "DevOps: The Secret Tool that’s Transforming Financial Services") sector now has a huge opportunity to provide the seamless, secure and personalised services that today’s consumers desire and expect. But in doing so, financial enterprises [must push forward with their journey](https://www.financedigest.com/why-finance-professionals-must-bank-on-a-journey-to-the-cloud.html "Why finance professionals must bank on a journey to the cloud") of digital transformation, and this needs to happen quickly. Those that can build a well-connected, secure, reliable, scalable, resilient and low latency IT infrastructure will win the race to the connected future and drive up competitive edge. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---