Red Hat’s Monica Sasso explains why adopting technology in financial services is easier said than done.
When it comes to financial services and regulation, it can seem like an industry that is particularly slow to change.
But there’s much more nuance when it comes to adopting technology in the finance sector, and creating a culture that allows digital transformation to take place is often about playing the long game.
Monica Sasso is a chief technologist for financial services in EMEA at Red Hat, where she provides strategic support to customers as they look to open-source and adopt open hybrid cloud technologies to drive business transformation initiatives.
Before Red Hat, she worked at a variety of financial institutions, including Nationwide, Barclays and Deutsche Bank.
‘Consumers don’t always appreciate what it takes to run a secure, always-on, 100pc safe bank’
– MONICA SASSO
Speaking to Siliconrepublic.com, she said that while conversations about change have been happening internally, she acknowledged that change in the financial industry can seem slower from a consumer point of view.
“As a consumer, if I’m honest, I’m not sure that it has changed that dramatically for me,” she said. “[But] it has evolved into being more digitally engaging and providing more real-time data.”
One of the biggest changes in finance over the last number of years is around the immediate updates we can now get when we spend money.
Sasso recalled an incident where she received an alert on her phone for a £493 expense at a French bail bonds company. Without this instant alert, she would not have been aware that any fraudulent spending had taken place until she next looked at her bank statements. “These micro alerts are a huge step forward and is part of the evolution I welcome.”
Other areas of her financial life, such as pensions, trading and credit, have evolved somewhat but have not dramatically changed yet. However, while she acknowledged the seemingly slow pace of change, she was also quick to defend the banking industry.
“The banks have been working incredibly hard and diligently, not only to support us through the pandemic, but to earn our collective trust back since the credit crunch.
“Part of this perceived lack of adoption of technology is consumers and technology providers don’t always appreciate what it takes to run a secure, always-on, 100pc safe bank.”
She added that when people say they think banks don’t want to change, she always counters it by asking them when the last time was that they weren’t able to buy something online. “I don’t think we appreciate what the banks have had to do to get us this far.”
The challenges around adopting tech
As with most industries, the adoption of technology can bring with it many benefits. From a regulatory point of view, it can bring greater transparency and the ability to democratise data to give regulatory firms better views of what’s happening. It can also allow innovations to flourish in the areas of fraud detection and anti-money laundering.
However, as Sasso has pointed out, adopting these technologies is not as simple as turning on a light switch.
Of course, there are legacy systems in place in traditional industries that can slow things down. But even that, according to Sasso, is not the main problem and many legacy systems are there for a reason. This means that adopting technology in the financial services sector is not as simple as out with the old and in with the new.
Instead, Sasso said the industry needs to focus more on the people and culture side of things in order to address the challenges of adopting new technology.
“Any time there’s a change, it’s always about trust and education and I think many folks in these firms have been bombarded with new regulations and rules and they may feel that how they’re doing it now… is OK,” she said.
“They don’t really want to change and they’ve been trained to be wary of anything new because new things bring in further threats that they then have to manage and comply with.”
She added that many people in these areas may not know how to automate a process or a series of controls.
“At the core, it’s finding ways to break down these cultural barriers and to create an atmosphere of trust, which would allow more collaboration and education,” she said. “I think those are really important topics that nobody really wants to address because they’re difficult.”
Another barrier at the heart of tech adoption is the perceived threat that technology can bring. “Cybersecurity is a huge, scary thing for all of us right now and it’s everywhere you look.”
“That brings us back full circle to the concept that education and trust is really what some of these barriers are,” said Sasso.
“It’s not necessarily people not wanting to use technology or not being able to use it, but [it’s] not understanding how they can use it and not trusting it and not trusting each other.”
Major tech trends
While solving the challenges around education and trust are easier said than done, Sasso did speak about some of the biggest trends she’s excited to see evolve within the financial services sector.
For consumers, speed of transactions will be key, along with personalised financial products, more digital touchpoints, chatbots and greater choice.
“From a pure technology point of view, things like data, AI, blockchain, these are fairly universal tech trends but they’re really growing and maturing in the open-source community and could prove to provide interesting solutions to age-old challenges that banks have and even the regulators,” she said.
“Other technologies that are less sexy like hyper-automation, which is anything that can remove the drudgery of operations teams and free them up to innovate, is another big trend.”
She also said how we work with this technology is a key area for the future and one that should not be overlooked when discussing tech trends as a whole.
“I remember three years ago, people talking about agile in a conversation at a board level with the firm I was working at. And now they’re actually starting to think about the next iteration of it, which is DevSecOps, and how we can really start to properly work differently.”
When asked how long that will take, she said how long is a piece of string. “A lot of that goes back to tech and education and trust.”