FirstRand IT Leadership Conference: Industry insights for the future of banking

More than 200 tech leaders from FNB, RMB, Wesbank, Ashburton and Corporate Centre convened on Zebula Bush Lodge for a couple of days to grapple with the forces driving the industry.

Strategic suppliers were on hand to advise on the latest topics such as big data, cognitive computing, digitisation, cyber security and blockchain.

Conference attendees enjoyed networking with colleagues and experts, while comedians Goliath and Goliath provided the evening’s entertainment and Aki from 702 supported as MC throughout.

IBM; converting precious “data is oil” to valuable insight Christine Ouyang is a senior data scientist who explained IBM’s recent acquisition of The Weather Company as a strategic push into the growing industry trend that “data is the new oil”.

People are searching for weather info more than 4 times the 3,5 Billion daily Google searches; IBM aims to be at the forefront of providing useful answers to the world.

She identified some key challenges facing business regarding big data, most significantly that too much time is spent on preparing and fixing raw data rather than converting and using it in the form of actionable insights.

Most companies actually have a data swamp rather than a data lake and IBM assisted Bancolombia to move to a more advanced analytics architecture which has helped them identify 40% more suspicious transactions in their compliance departments.

Business executives still don’t know what they don’t know and cognitive computing such as IBM Watson moves beyond solving predefined problems to answering more ambiguous and semi-structured questions.

The bank of tomorrow will empower all personas in the data value chain to build enabling, digitised networks that refines and monetises its most precious resource.

How does IBM Watson’s cognitive computing work?

RedHat; open source – collaborative architecture or communist propaganda?

“It all happened by accident and it was all achieved by amateurs” are the 2 lessons Jan Wildeboer explains as the biggest epiphanies of his open source journey.

A reputable Swiss bank once accused him of propagating communism but didn’t realise that 90% of the world’s capitalist stock exchanges run on Linux, 70% of which is provided by RedHat.

Wall Street also can’t understand the business model of selling free software, but for IT communities the value is significant; 80% of your stack is non competitive and provides opportunity for collaboration, open source helps drive this.

There are scaleability issues with closed architectures but companies like travel system provider Amadeus have overcome these through open source and built their own versions which RedHat helped them with and then sold it back to them!

The world is becoming software defined and all the fintechs are building out on open source; developer collaboration has dramatically increased in the last 5 years as cultural changes and new ways of working such as DevOps has swept through the industry.

Interview with Jan Wildeboer on open source technology

“we are moving into a world where people want flexibility on every level”

CIO Panel discussion; Wesbank, RMB, FNB and Ashburton. The top IT leader of each brand in the FirstRand group offered their insights in a Q&A panel led by MC Aki Anastasiou.

The changing role of IT leaders in a digital age was a key theme and Sean Mulcahy, head of Customer Insight asked how IT is changing to meet the increasing demands of speed and quality.

Mo Hassem, FNB CIO used the example of IBM’s CEO and the transformation she is driving: “you have to fundamentally change the whole organisation and have the courage to take the right steps to go forward.”

Across the group, increased collaboration, sharing and re-use are crucial;

“build a team and create sufficient momentum that lasts long after you have left”

explained Thabang Legae, CIO of Wesbank, the market leader in vehicle asset finance.

The audience challenged the panel that business leaders often question the high costs of IT and they struggle to get sufficient budget.

“We need to change this idea of IT as a cost line” responded Alan Vickery, RMB’s CIO, “it’s an investment – but we also need to be cost effective by re-using and sharing what we already have in the group”.

Duncan Armstrong is the CIO of the new investment franchise Ashburton, he explained their IT journey and the different levels of maturity in the businesses that have been combined to form the new division.

Norton Rose; Blockchain and the future of banking Despite Warren Buffet urging people to stay away from bitcoin, Rohan Isaacs dismissed the idea that blockchain is evil and explained the rising popularity of Distributed Ledger Technology.

He explained that bitcoin runs on the all access, permissionless blockchains while financial services are more likely to adopt permissioned blockchains which have authorisation protocols for participants.

FICA / KYC is a perfect use case for blockchain although there are still likely to be legal issues with blockchain in the future and there are many experimental use cases currently in progress.

Isaacs was asked if he thinks blockchain is a threat for banking;

“yes definitely because you don’t need the central authority that banks use today but disruption is a long way off and business models will adapt significantly in the coming years. Like all models of innovation you mustn’t be afraid to cannabilise your own business to stay ahead and harness any form of disruption that threatens your industry.”

WATCH: RMB’s Farzam Ehsani talks at Gibs on the implications of Blockchain on banking

Oracle; responding to economic changes Nazif Mohammed continued the theme of responding to challenges and implored the conference not to waste a good crisis; digital, cloud and big data are fundamentally changing IT but use the opportunity get ahead and reinvent banking for the future.

He spoke about their customer data hub solution and that 24% of new data analytics initiatives are focused on improving customer centricity.

“Banks like Westpac have successfully modernized customer information systems to improve insight and National Australian Bank built a new culture around digital channels, automated account opening and achieved a brilliant launch of UBank, effectively from scratch.”

Locally 46% of companies see inhibitors to using public cloud services which are hosted internationally but Mohammed believes those issues are outweighed by cloud’s cost efficiency, increased security and flexible infrastructure capacity.

He advised that private cloud could be a first step in the journey to achieving the transformational benefits of cloud which also support the new ways of working such as Agile and DevOps with shorter delivery cycles and incremental solution delivery.

Intelsat and Q-kon; friendly skies connecting humans. The world’s first all-digital, commercial satellite platform the Intelsat EpicNG fleet recently launched a new satellite into space which was shown on video at the conference (watch more details below).

The world’s leading provider of satellite services continues to drive the most advanced technology that connects humans from hundreds of kilometres above the surface of the earth.

Intelsat Regional Vice President Brian Jakins said that in partnership with Q-kon they support FNB’s branch and ATM networks with high capacity, high efficiency connectivity.

This ensures the highest possible levels of availability for these critical retail banking services and their new satellite will make carrier-grade telecom and enterprise connectivity available and continue to drive benefits for the FNB network.

The conference was live streamed to the rest of the bank through a Q-kon dish installed outside the venue and CEO of Q-Kon Africa Dr Dawie de Wet was on hand to explain how they worked with Intelsat to support FNB.

“You are the only SA bank that had the vision to develop a satellite partnership which reduced cost, multiplied capacity and unlocked value for your customers through improved connectivity across your network.”

Q-Kon provides the ground services that receive and distribute the satellite feed and he feels confident that the reliability of satellite connectivity makes it the best choice for high availability, large scale deployment and low data requirements such as ATMs.

Dr De Wet also wrote in January 2015 about using satellites for expanding into Africa, “it is an ideal application for satellite networks, the ‘anywhere in Africa’ signal footprint and low-cost remote equipment provide a peace-of- mind alternative – either as primary or back-up”.

The first of Intelsat’s next generation high throughput satellites

Microsoft; world mission through digital innovation. A transformation of culture and mission has swept through one of the biggest tech firms in the world; new CEO Satya Nadella is changing the culture from the top down.

Nadella has set a vision for Microsoft to help every person and business on the planet achieve more; an example is the 4Afrika Initiative which launched a low-cost wireless broadband pilot project in rural Kenya using “TV white spaces” or the unused parts of frequency bands of wireless spectrum.

Speaker Rory Headon-Weeks also provided a demo of how PowerBI can answer natural language questions through Microsoft’s intelligent personal assistant called Cortana. McDonalds has used similar technology to improve processing of drive-through orders; poor audio communication typically causes wrong orders, dissatisfied customers and lost revenue – technology is solving this problem.

Another innovation is Conversations as a Platform and the recent LinkedIn acquisition provides rich customer data for sales people setting up meetings.

The HoloLens virtual reality technology is providing breakthroughs in areas such as corporate training; watch below how Japan Airlines is improving training of maintenance crews who service Rolls Royce jet engines.

Microsoft HoloLens and Japan Airlines take aircraft engine maintenance into virtual reality

Infosys: How to create a digital bank Rajashekara Maiya explained that 69% of banks currently don’t have a systematic digital strategy to achieve more frictionless banking.

The bank of the future is fully digitised and radically customer centric; a recent transformation at one of their clients reduced account opening steps from 20 to 6 and achieved a 33% increase in teller productivity.

No-one in the audience was able to answer which company is the world’s biggest fintech unicorn; no surprise when Maiya revealed it as an affiliate company of Chinese giant Alibaba, the world’s biggest online commerce company.

Ant Financial runs an online payment platform and is valued at $60 Billion; an example of how digitisation is completely disrupting the financial services industry from every corner of the planet.

Maiya made this real for the audience by showing a typical banking website and next to every service he listed start-ups that are actively disrupting and digitising these offerings.

Infosys believes there are 12 trends impacting the global banking industry; key items on this list for a bank’s IT teams to grapple with include disintermediation and the digital revolution.

Performanta; take off your shoes, information security as an enabler Cyber-security is bad and it is getting worse; this was the sobering introduction of CEO and co-founder Guy Golan.

He also stressed that the human element is key to implementing a successful defense strategy although companies are struggling to hire and retain qualified cyber-security professionals.

A plethora of service providers riding the wave of buzzwords in the industry is also not helping the situation, most important is a top down culture of informed vigilance at every point of vulnerability.

Hackers spend an average of 270 days “dwell time” in bank’s systems during which they are largely undetected and breaches are often due to employee vulnerabilities such as weak passwords. Education and awareness is critical to reduce the number of such non-intentional insiders compromising a bank’s systems.

DevOps; everything we thought we knew is wrong Standard Bank’s head of development, Prof Josef Langerman provided the last and most entertaining talk of the conference.

Unpacking the new ways of working in IT, he believes that DevOps is the most exciting movement in IT. He is passionate about building the local industry and pointed to the Africa DevOps Days as a good example of improved collaboration between the big banks.

A strong IT industry is also good for the country and there are positive signs; Standard Bank is bringing 600 jobs back from India, Absa is bringing back 400.

Langerman believes teams must create space to go faster as the traditional approach of maximising utilisation actually increases friction. The concept of a project is also dead; prioritised features delivered by co-located, cross functional teams in quicker release cycles delivers faster and better quality software.

Langerman also recommended a number of books on Lean, Agile and DevOps, most of which can be found on his blog.

The authors of these books and people such as Daniel Pink, Jeff Bezos, Jeff Sutherland and Ken Schwaber have changed the world of technology, we must understand their methods and principles to apply them in our own organisations.

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