The financial sector has developed a reputation for having demanding and unique IT requirements, but is this all talk and no substance? Nathan Statz reports.
One of the most stressful jobs around is supposed to be an air traffic controller, constantly fretting about the giant birds of steel that are circling overhead, often filled to the brim with humanity. But spare a thought for the finance sector professionals that provide the insurance and funding for every facet of business, from the controller’s potential for malpractice down to the cashew nuts they serve on the aircraft.
From a vendor point of view, dealing with banks and other companies might see us demand more. We are probably very demanding types of users, but that’s also because the money we pay for it is different to most other organisations of the same size from another sector.
When you really start to examine the machinations of an enterprise – airborne or otherwise – it is easy to see that the financial sector is involved in everything you see and touch. Even the simplest of business tools such as a keyboard or a pen were manufactured by a company that relies on the financial sector, so it is fairly unsurprising that this particular vertical is seen as a little bit different.
The financial industry is a familiar playground for Santosh Babu, who has more than ten years experience as a CIO of regional banks like Al Masraf and RAK Bank. Babu is now the MD of his own advisory firm, Saapa Consulting Technologies, and sees a lot of difference between the financial sector and other verticals.
“From a vendor point of view, dealing with banks and other companies might see us demand more. We are probably very demanding types of users, but that’s also because the money we pay for it is different to most other organisations of the same size from another sector,” he says.
“When you are spending that amount of course your demands will be different. You want a 24/7 support structure, which is not always the case in other verticals. We insist on 24/7 because you have internet and phone banking available 24/7 so you need your vendors to provide a level of support,” adds Babu.
One of the biggest differentiators for the organisations who play with other people’s money is security. The sheer amount of sensitive data being generated and transferred around creates serious risk. Every branch of a bank is flush with computers and terminals that are whisking important details into storage disks, not to mention the automated systems transferring decimal points that represent a fortune in operating capital. With this comes the need for pricey security systems and CIOs will often go over the vendor agreement with a fine-tooth comb to ensure the solution will be up to scratch.
“You are playing with money, so security is of a higher importance compared to many industries. This is why you will see that the IT department in a bank will always have a separate division for IT security. Typically you will even find a chief information security officer heading that function with a few guys,” explains Babu.UVK Kumar, head of IT at Doha Bank in Qatar, believes that information security has evolved differently in financial sectors, as it was required to be bullet-proof right from the very beginning.
“Financial information has always been sensitive, so when there was no internet banking there was still information security and it had been a primary principle of the financial industry. As technology grew up it became used more in financial transactions,” he says.
“Add to that the security aspects that also came into the picture. Compared to any other industry, information security has been cultural in the financial industry. That culture had to be retained and sustained or strengthened – even with the new technology coming in – so compared to other industries the financial industry is sensitive on information security,” adds Kumar.
You are playing with money, so security is of a higher importance compared to many industries. This is why you will see that the IT department in a bank will always have a separate division for IT security.
In addition to security and having to account for 24/7 availability, Kumar explains that compliance is a major issue for the financial sector that might not be such a big factor for other industries.
According to Kumar, banks and financial institutions in the region are not yet using their systems effectively for compliance purposes, mainly because they are more focused on developing and supporting banking requirements.
When it comes to IT requirements, the phrase that “this is particularly true in the banking and finance sector” is done to death at conferences, exhibitions, user groups and more recently in online collaborative discussion. Vendors are usually the biggest proponents of the sentence – they are also responsible for coining it – particularly when discussing an area that may see them make some coin.
According to Kumar, the difference used to be very noticeable, but the gap has reduced because sectors like retail are now capturing a much larger chunk of customer information than they ever were before.
The heat of the flame
Feeling the brunt of the financial sector’s intensity are the IT vendors who operate in this space. While it may have become old-hat for the many organisations who supply the finance sector, the high expectations of CIOs still have to be met. Kalpesh Desai, CEO of Agile Financial Technologies, believes that banking and finance end users in the Middle East have higher expectations from vendors than other sectors do.“If they are servicing customers from a wealth or portfolio management perspective, then they need those changes to work,” continues Kalpesh. “If I look at other sectors like manufacturing or retail, the service-level expectations of their customers are not as high as customers of financial institutions.”
Mohamed Gaafar, business development manager at Orange Business Services, explains that the concerns of CIOs in this sector are mainly focused on reliable service, the smooth running of applications and how to simplify their overall customer experience.
“It really depends on what sector we compare them too, but banking is about services and services are about assisting the application. So it is one of the core business [elements] and I think CIOs need to be very well educated about technology in order to not affect the core business of the banks,” he says.
The fact that bank customers tend to get very upset if they can’t access their funds or there is a problem when they try to transact in consumer or business banking means that the efficiency and effectiveness of the IT systems that underpin those transactions are critical.
According to Gaafar, there has been a changing of end user attitudes and understanding of technology in the region over the last few years, particularly with the maturation of the IT space in the financial sector.
“We have seen a lot of progress in terms of the applications used in terms of the infrastructure built and the requirements to enhance services to end users. I don’t have previous experience – working inside this sector – outside of the region, but in the last few years there has definitely been a huge development,” he adds.
Differences between certain sectors are of particular note for Duncan Adamson, general manager of IT consultancy firm, Intergence, in the Middle East. The variance between sectors is a question of degrees – according to Adamson – as the risks associated with any form of sub-optimal IT solution is more acutely felt in the finance sector.
“The fact that bank customers tend to get very upset if they can’t access their funds or there is a problem when they try to transact in consumer or business banking means that the efficiency and effectiveness of the IT systems that underpin those transactions are critical. It’s a bit different to an enterprise trying to access their e-mail for an hour or send a document to a project manager for example, so I think it’s the acuteness of the problem if a problem does exist,” he says.
“There is a whole host of trends we have been seeing in this region that are perhaps different to some other regions and I think that banks at the moment are probably suffering the effects of the downturn as bad as anyone,” adds Adamson.For Harish Sarma, banking sector manager at Emitac Enterprise Solutions, the attitudes and expectations of end users in the Middle Eastern financial sector are considerably higher than those from other sectors.
“Vendors are always expected to be on their toes. A lot of emphasis these days is on how vendors can address customer concerns of bringing down the total cost of ownership for their respective solutions,” he says.
Let it not be said that organisations who are not in the financial sector are merely sitting around twiddling their thumbs. The research boffins at NASA would no doubt be able to claim a share of the most-complicated sector title – the amount of planning that goes into every hunk of metal being sent into orbit would testify to this. Though once again financial institutions are involved in that process, from handling the government accounts that funnel taxpayer dollars into spaceflight programs right down to the loans given to the company who make the shiny microphones in the control centre.
We may never see CIOs making a spacewalk or explaining how great their leap was for mankind, but everything from the flag that bites into the surface of the moon down to the speakers in Houston, where the problems of astronauts are explained, were all once no more than a subscript on a financial transaction somewhere.
For all the latest tech news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.