Banking Evolves into a More Agile, Customer-Centric Model Thanks to AI-Driven Cloud Technologies | NTT DATA

Tue, 13 February 2024

Banking Evolves into a More Agile, Customer-Centric Model Thanks to AI-Driven Cloud Technologies

Based on NTT DATA's report 'The Digital Horizon: Banking's Shift from Mainframe to AI-Driven Cloud Infrastructure.'

NTT DATA, a global digital business and IT services leader, announced a new global banking research report entitled 'The Digital Horizon: Banking's Shift from Mainframe to AI-Driven Cloud Infrastructure.' The study analyzes the most significant changes facing the industry. The findings are based on a survey of 650 global decision-makers in key markets such as the United States, the United Kingdom, Japan, Germany, Spain, Mexico, and Brazil.

The study provides a global view of the modernization of the industry and its trajectory towards innovation and transformation. The survey uncovers a transformative trend: banks are increasingly starting to work with artificial intelligence and cloud services, driven by the multiple ongoing challenges faced by the industry. These challenges stem from consumer demands, regulation, new players in the market, as well as competitive pressure from innovative technological advances.

 

Modernization and Transformation Trends

Analyzing the trends presented by the results, there are several points to highlight about the evolution, transformation, and modernization of the sector's institutions:

Legacy systems based on traditional infrastructures: Despite the fact that 89% of the organizations identify themselves as innovators, 63% continue to operate on legacy systems, proving the persistence of this type of infrastructure. More than 60% of banking managers say that generative AI is helping to transition applications to the cloud, pointing to a transformative shift to this technology.

Nine out of ten executives report that their initiatives related to both technologies are supported by their boards. While the majority of banks are already integrating AI into their technology use, 30% are still in the early stages of adoption. In addition, 80% lack a strategic framework for the adoption of Gen AI, clearly indicating a need for enhanced capabilities.

The cloud, in particular, is emerging as an enabler of process innovation: 36% of respondents mention flexibility and scalability as critical factors for cloud migration, indicating a shift beyond cost concerns.

Meanwhile, 25% of respondents also recognize a growing trend in cloud migration driven by AI advancements. This portends a new era in which the collaboration between the potential of AI to reinterpret legacy code - one of the banks' biggest technology challenges - and cloud technology's scalability to accelerate modernization and transformation initiatives, suggesting that the longstanding reign of mainframes is approaching its horizon.

Kaz Nishihata, Director and Senior Executive Vice President at NTT DATA Group Corporation commented: "Banks are evolving not only technologically but also culturally. The industry's rapid adoption of AI and cloud is redefining business models and establishing a new norm in sector leadership. This technological tide is propelling banks toward a more intimate understanding of customer needs, delivering services that are faster, more secure, and uniquely tailored."

José Manuel Pérez Bajo, Banking Partner at NTT DATA said: "driving change is challenging, but it is also an opportunity for banking transformation. Understanding the current landscape and the options available and recognizing the obstacles makes it easier to embrace technology modernization with greater visibility and less risk. NTT DATA is helping its industry clients with initiatives related to Gen AI, empowering the evolution of legacy systems and leveraging cloud environments to boost security, improve resiliency, innovate, and modernize."

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


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