The Threats and Market Conditions
The banking and financial industry faces some tough challenges that many other industries do not.
- The continually increasing regulations.
- The continuous threat of cyber-attacks.
- The disruptive innovation from outside of the sector.
- The amount of change in the demographics of their customers through generations of change and wealth distribution.
At the same time, the very nature of money has radically changed. It’s become normal for consumers to never actually handle money. Direct deposits are made into employee accounts, purchases are made by credit and debit cards and B2B and B2C payments to suppliers are made online. Ordinary deposits are made via one’s mobile phone, without even touching an ATM or walking into a bank. Investments and the accounts they are held in exist in the ether. International capital flows occur across data networks.
Strategies for dealing with regulations, cyber threats and technology innovation are defensive in nature. They’re table stakes. With the exception of innovation driven by non-traditional challengers, these shifts in the industry are not growth strategies. The changes taking place require tremendous resources, but really don’t add to the bottom line. In reality, we are moving to an era where all companies in every industry are becoming software companies. This transition means there needs to be an accelerated focus on creating new applications quickly and efficiently. Enterprises in all industries now have the ability to innovate in record time. The old saying, “He who hesitates is lost,” has never been more apt. Applications have to be developed, put into production and delivered to market in record time.
This tectonic shift offers tremendous market advantages for banks with agility in their software delivery processes; that is, those that can respond to rapid changes in the financial services market. Customer loyalty in the banking industry has transformed from being built solely by personal interactions, to being built by offering the most innovative, secure and high-quality digital interactions. Acceleration of new functionality and delivery of new applications is the key to maintaining competitive advantage.
In this two-part article, we’d like to break down the way CloudBees and the application of the DevOps principles in the banking industry is beginning to ease some of these pressures to yield favorable results.
The Customer Experience Revolution
Enhancing the customer experience is the sure path to growth. The digitization of money has blown the roof off of the brick and mortar branch model for banking. Building more and more branches has been replaced by a dynamic, multichannel delivery model that is available 24×7. In 1994, Bill Gates commented that “banking is necessary but banks are not.” It was an insightful comment that is becoming conventional wisdom today. Therefore, customer loyalty is no longer a function of a good banking relationship, with a free toaster thrown in. Instead, an easy to use, always available multi-channel offering enhances the customer experience, leading to loyalty. And in banking, loyalty is a significant part of profitable growth. Another important part of growth is allocation of more resources to streamline and enhance the customer experience. Banks do this by better servicing customers and continually creating new products and services. To meet the increasing expectations of customers, banks must accelerate the digitizing and ongoing enhancements of processes, services and products. The speed and quality of application development has become a competitive advantage. Engaging applications will enable banks to more effectively apply customer analytics, leading to even deeper customer knowledge and even more targeted products and services, which means more loyalty and more growth. The cycle thus continues.
More Applications, Faster, with Less Cost and Risk
Innovative banks that delight customers and achieve robust growth require the continual delivery of new and improved applications. In the race to offer new and enhanced services, bank executives demand speed and innovation without sacrificing quality. Application development and operations teams are under great pressure to meet the demands of the business. Development and operations organizations are being tasked to build, test and release both new applications and incremental updates to existing applications in shorter cycles. Adopting DevOps practices has been a key enabler for companies that want to deliver a continual stream of new and improved applications. DevOps practices promote a culture of collaboration that reduces application delivery time and improves quality through improved productivity and efficiency. DevOps practices emphasize methods for more effective communication and collaboration between development, operations, testing and quality assurance teams. However, integrating DevOps into an IT organization requires an organizational culture shift. Ironically, an increase in regulatory compliance mandates is supporting the acceleration of internal collaboration. It has been common in banks for lines-of-business to have their own IT teams, resulting in a series of IT silos across the enterprise. The most recent US Federal Reserve Basel rules focused on capital requirement ratios that necessitate IT centralization. What do these new regulations have to do with accelerating application development? A lot. With a federal mandate for IT consolidation, the cultural barriers oftentimes difficult to overcome become easier to navigate in the shift to DevOps.
DevOps and Continuous Delivery
While DevOps centers around the collaborative effort required for rapid and frequent application development, testing and delivery, there is no single DevOps tool. In fact, DevOps is not about tooling, it is about culture. There are however a variety of tools commonly used across the entire development and delivery process by successful DevOps teams, including both proprietary and open source tools. DevOps teams are increasingly using continuous delivery as a process that enables development teams to continually deliver secure and tested code in a production-ready state at all times. Automation can significantly accelerate software delivery and the transformation to a DevOps environment. In fact, as pressure from the business increases to deliver new and improved applications, a more pragmatic tool based approach is required, in order to avoid:
- Higher costs of support and training inherent in the deployment of a variety of tools across IT teams
- Risks related to the overwhelming task of managing updates and patches to a myriad set of tools
- Barriers to collaboration resulting from use of disparate toolsets
Let’s review: DevOps is an organizational set of practices that accelerates application delivery while ensuring more reliable releases. DevOps is achieved through a culture of collaboration and teamwork. Continuous delivery is the end-to-end process enabled by DevOps organizational practices. Finally, to achieve both continuous delivery and ultimately a DevOps culture, the right tools will expedite the transformation. We have lots of tools to support these goals, and that’s part of the problem in transforming to a DevOps culture. If these toolsets are not rationalized, banking institutions face more cost, risk and barriers to achieving a DevOps culture. Digital products and services must be expedited to the marketplace in order to gain feedback, which should in turn go back into the product development process.
Tools of the (DevOps) Trade
Jenkins is an open source automation server used by millions of IT personnel around the world to support continuous integration and continuous delivery processes. Jenkins enables development teams to continuously deliver secure and tested code in a production ready state at all times. To accomplish continuous delivery, application delivery teams incorporate automation to deliver software more rapidly and with fewer errors. Jenkins is already the de facto CI/CD tool of choice.
Built with Java, Jenkins is open source software, and is supported by a robust and active community with over 300 plugins to support building and testing virtually any project along with CloudBees and it’s hundreds of implementation and service partners, such as SPK. In addition, Jenkins has an extensible architecture, giving it the ability to work with virtually any tool and technology. Jenkins is ubiquitous around the globe and is being used by software delivery teams within numerous enterprises – including many global banks and financial institutions.
CloudBees Software Delivery Automation
CloudBees Software Delivery Automation (SDA) enables enterprises to optimize their software delivery process for increased innovation and security by connecting, automating and orchestrating the tools and functions across development, operations and shared service teams.
SDA products connect, automate and orchestrate the tools and functions across development, operations and shared services teams. By eliminating organizational silos, banks can optimize their software development and delivery process to bring digital products from idea to production quickly and safely. This shift allows banks to innovate and meet the market where they are.
On top of helping the delivery of software, SDA also provides insight into the full software delivery lifecycle, enabling increased velocity and reducing risks related to unmet deadlines, budget and security issues. They enable modern software development and delivery in complex, regulated banking.
A Banking DevOps Journey
Broadridge has taken a DevOps approach, powered by CloudBees, to re-architect how the company develops and delivers business critical software for its financial customer transactions – from how brokers process their books to the features used on the trading floor.
In the next article in this series, we will discuss open source applications and how Enterprise can adopt them with specific circumstances and risk mitigation strategies, how CI/CD is done in the banking industry, along with digital product trends in the banking industry that DevOps practices will support. Stay tuned for Part 2 to be published soon.