Banks are evolving towards a more agile and customer-centric model thanks to cloud technologies driven by AI | NTT DATA

Mon, 12 February 2024

Banks are evolving towards a more agile and customer-centric model thanks to cloud technologies driven by AI

NTT DATA, a leading digital business and IT services company, released a report focused on the banking sector titled 'The Digital Horizon: Banking’s Shift from Mainframe to AI-Driven Cloud Infrastructure,' aiming to analyze the most significant changes facing the industry. The findings stem from a survey conducted with 650 decision-makers in entities globally.

The study provides a comprehensive perspective on the sector's modernization and its trajectory towards innovation and transformation. In this regard, the survey has revealed a transformative trend: banks are increasingly collaborating with artificial intelligence and cloud services, driven by multiple challenges. These challenges stem from consumer demands, regulations, new market players, and competitive pressure from innovative technological advancements.

Modernization and Transformation Trends

Analyzing the trends shown by the results, several points stand out that will shape the evolution, transformation, and modernization of entities in the sector:

Legacy systems based on traditional infrastructures persist: Despite 89% of entities identifying as innovative, 63% still operate on legacy systems, confirming the persistence of this type of infrastructure. Over 60% of banking executives state that generative AI is decisively facilitating the transition of applications to the cloud, indicating a transformative phase towards this technology.

Board support for AI and cloud initiatives: Nine out of ten executives report that their initiatives related to both technologies are backed by their boards of directors. Although most banks are already integrating artificial intelligence into their technologies, 30% are still in the early stages of adoption. Additionally, 80% lack a strategic framework for adopting generative AI, highlighting the need to improve capabilities.

Cloud as an innovation facilitator: The cloud emerges as a facilitator of innovation in processes, with 36% of respondents mentioning flexibility and scalability as key factors for migrating to the cloud, indicating a shift in concerns beyond costs.

Cloud migration driven by AI advancements: 25% also acknowledge a growing trend in cloud migration driven by AI advancements. This foretells a new era in which the collaboration between the potential of artificial intelligence to reinterpret legacy code – one of the major technological challenges for banks – and the scalability of cloud technology will accelerate modernization and transformation initiatives, suggesting that the traditional persistence of legacy systems is coming to an end.

Kaz Nishihata, Director and Senior Executive Vice President of NTT DATA Group Corporation, commented, "Banks are not only evolving technologically but also culturally. The rapid adoption of AI and the cloud by the industry is redefining business models and setting new standards in sector leadership. This technological force is driving banks toward a deeper understanding of customer needs, enabling the delivery of faster, more secure, and personalized services."

José Manuel Pérez Bajo, Banking Partner at NTT DATA, stated, "Driving change, though a significant challenge, also represents an opportunity for the transformation of banking. Understanding the current landscape, available options, and recognizing obstacles makes it easier to modernize technology with greater clarity and fewer risks. NTT DATA is assisting its clients in the sector with initiatives related to generative AI, driving the evolution of traditional systems and leveraging cloud environments to enhance security, improve resilience, innovate, and modernize."

Saraswat Sarkar, Banking Director at NTT DATA Netherlands also stated, “Financial Services Industry today faces an ever-increasing demand for effective management of customer information, albeit adhering to the rules of data privacy. This can only be made possible by embracing what modern technology has to offer by leveraging Generative AI driven cloud transformation. Financial Institutions are betting on gaining greater visibility & insights to offer more personalized services to their customers thereby creating a differentiation in the already cluttered market and increasing market penetration”

To read the full report, click here: The Digital Horizon: Banking’s Shift from Mainframe to AI-Driven Cloud Infrastructure