In spite of diligent digital transformation efforts, most financial services institutions
still support a loose patchwork of siloed systems and repositories. These dis-integrated resources are “data platforms” in name only: in addition to their high maintenance costs, their lack of interoperability with other critical systems makes it difficult to respond to business change.
The stringent requirements imposed by regulatory compliance, coupled with the proprietary nature of most legacy systems, make it all but impossible to consolidate these resources onto a data platform hosted in the public cloud. To modernize and integrate this patchwork of systems and data sets, financial services institutions must adopt a modern, hybrid data platform based on open-source technologies and open standards.
The benefits of a hybrid data platform for financial services
A hybrid data platform can coexist seamlessly with an institution’s legacy systems, enhancing its data operations, and enabling it to take a phased approach to digital transformation.
The top-line benefits of a hybrid data platform include:
- Cost efficiency. A hybrid data platform enables the preservation of existing investments in legacy applications and workloads without modifying them. It permits transparent access to distributed data irrespective of its location, ensuring interoperability with legacy systems, breaking down legacy silos by enabling financial services to selectively migrate non-sensitive data to cost-effective cloud infrastructure.
- Simplified compliance. It ensures compliance with regulatory requirements while shifting non-sensitive data and workloads to the cloud. Its built-in intelligence automates common data management and data integration tasks, improves the overall effectiveness of data governance, and permits a holistic view of data across the cloud and on-premises environments. The combination of these features improves the accuracy of financial reporting, operational analytics, and other data-driven initiatives.
- Improved scalability and agility. It provides a way to accommodate change—for example, by distributing data between cloud and on-premises environments according to its age, sensitivity, frequency of access, the requirements of workloads, and more. Financial services firms can leverage the near-infinite capacity of the cloud while leveraging on-premises resources to meet demanding performance and compliance requirements.
- Flexibility. It integrates data from databases, cloud or RESTful APIs, and real-time, streaming feeds, as well as unstructured data from document databases and other sources. And by handling both batch and streaming data, it supports traditional analytic workloads, essential for decision support, as well as real-time operational analytics.
- A phased approach to modernization. Legacy systems require specialized—and, over time, increasingly costly—expertise to maintain and keep secure. They’re inflexible, both in terms of their ability to interoperate with other systems and in terms of updating them. A hybrid platform significantly reduces technical debt of all kinds, allowing for the gradual migration of non-sensitive data to cost-effective cloud storage. This minimizes upfront disruption while reducing maintenance costs over time.
- A radically improved security posture. It centralizes security threat detection and compliance monitoring, incorporating built-in measures—like on-by-default data encryption, and role-based access control (RBAC)—that eliminate the common risks inherent in legacy, siloed systems, transforming the institution’s security posture.
Pay down technical debt, comply with regulatory requirements
Technical debt attaches itself like barnacles to legacy systems making a hybrid platform the only viable solution for most financial institutions. Legacy systems are usually too outmoded—or, in the case of proprietary, black-box systems, too poorly understood—to migrate to the cloud.
In the same way, a confusing assortment of regulatory requirements prevents financial services institutions from moving sensitive data and operations to public cloud infrastructure. For these sensitive workloads and data sets, a hybrid data platform gives organizations a way to balance the needs of compliance with the necessity to innovate and modernize. And by leveraging open-source technologies and adhering to open standards, a hybrid data platform minimizes the creation of new technical debt, offloading the lion’s share of maintenance to a thriving open-source ecosystem. Instead of paying down technical debt, focus can be placed on identifying new use cases for predictive analytics and machine learning (ML), embedding advanced analytics into operational workflows, and developing new products and services.
Helping financial services institutions surf the wave of M&A consolidation
With a predicted uptick in merger and acquisition (M&A) activity, a hybrid platform is both a tactical and a strategic asset. By permitting a holistic view of data, automating core data management and data integration tasks, and simplifying data governance and data security, a hybrid platform helps facilitate the seamless merging of dissimilar systems and processes—a daunting task in any M&A scenario.
The reality is that merging the operations of two or more financial institutions of significant size and maturity entails the redesign of enterprise architecture. It involves not just integrating applications, workloads, and data across disparate systems, but exploring, mapping, and reconciling dissimilar business processes. Because a hybrid platform exposes a common set of built-in features, functions, and interfaces, financial services institutions can use it to design reliable, resilient workflows that integrate services, workloads, and data across dissimilar systems or processes.
If you build it yourself, will the value be there?
Financial institutions can design, build, test, and launch their own hybrid data platforms—or adopt a best-in-class solution like Cloudera Data Platform (CDP), which is based on open-source technologies and open standards.
Building a bespoke data platform, hybrid or otherwise, means taking on significant new technical debt, and also entails a not-insignificant long-term risk, requiring extensive customization of open-source technologies to underpin its bespoke data platform, as well as incur responsibility for the long-term maintenance of these customizations.
In addition, financial services institutions must design, implement, and maintain any necessary features that the upstream open-source technologies lack. Today, no combination of open-source technologies approximate’s CDP’s built-in capabilities for automating tasks like data profiling, data cleansing, and data integration. Nor do extant open-source technologies replicate CDP’s transparent data federation capabilities, rich data governance feature set, or robust security controls.
With CDP, financial services institutions get the benefit of tens of millions of dollars in intellectual property investment—without the associated upfront cost, residual technical debt, or long-term risk.
Learn more about CDP and how Cloudera supports Financial Services Modernization.