Innovation in the Japanese Financial Services Industry, Part 2: Panel Discussion

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Jul 22nd, 2014

Celent hosted Innovation & Insight Day Tokyo on June 5. Following the event presentation titled “Digital Financial Services and New Innovation Initiatives,” which focused on Celent’s innovation survey results, a panel discussion was held.

This is the second in a two-part report providing an overview of event proceedings.

 

Five leading experts in Japan’s financial industry joined the event as panelists. Celent would like to offer a heartfelt thank-you to these individuals for taking part despite the pressure and the presence of competition and many disclaimers. The panelists’ wealth of experience and sheer passion for innovation was palpable and the content thought provoking. Above all, the impassioned and experience-informed comments of panelists displayed the confidence of Japan’s financial industry. Below are some of the more salient comments that demonstrate the spirit and mindset of innovators in Japan.

What motivates your firm to innovate?

  • “Responding to customer expectations.”
  • “A backdrop of growing user needs and the proliferation of technology and the environment to meet these needs.”
  • “Our objective is to remove all inconvenience from the customer experience.”
  • “We aspire to offer financial services that achieve exactly what people feel they need and consumers think they want.”
  • “Innovation is the lifeblood and fate of a corporation.”

 

What drives innovation at your firm?

  • “Aligning innovation objectives and technology employed.”
  • “Integrating technology and compliance is important.”
  • “Amplifying the motivation and drive of each employee to take action.”
  • “Reflecting the intentions of management.”
  • “Resisting the temptation to seek short-term growth.”
  • “Supporting management philosophies that bet on uniqueness.”

 

The threat and opportunity of disruptive innovation

During the proceedings there were questions and opinions from participants exchanged with the moderator:

  • “There is no special opportunity for innovation. It is important to reflect innovation in daily management. That is something that we have done since we started our business and something that we will continue to do. Innovation is simply naturally part of what we do.”
  • “We do not see disruptive innovation as a threat. Rather, for the development of the industry as a whole, the kind of shakeout such innovation entails is necessary. We will undergo challenges and survive—and look to take on more such challenges.”

 

Celent concluded the event with the below message.

Managers: Have faith and confidence in innovation

The importance of leadership and management responsibility in innovation is self-evident. At the same time, innovation is a mid-to-long-term journey—more a marathon, than a sprint. Failure is sometimes to be allowed. In addition, it is not uncommon to destroy a corporate culture that has been fostered over many years. An intense commitment to innovation on the part of management itself is required. Technological drivers continue to advance and case studies of successes only increase. Mangers: Be confident.

 

Distinguish between disruptive innovation and kaizen (improvement), and the need to tackle the former

The greatest factors hampering the progress of disruptive innovation are not to be found outside a company but within it. Especially within large corporations, where tendencies such as the below are seen; conversely, these tends to derail innovation. These tendencies include the following.

  • Compared with start-ups and small or medium enterprises, large firms boast a wealth of capital and business resources.
  • In particular, these resources include human resources and technology, which can be channeled to R&D.
  • These companies often have business operations that require 360-degree management and much competition
  • Such firms are often home to isolated “black sheep” employees that seek to innovate.

If you neglect innovation, cannibalization can be expected to take place not only in your core business areas but in new businesses as well. To keep innovators from being ostracized as black sheep, it is important to clearly distinguish between the accumulation of kaizen (improvement) on a daily basis in core operations and disruptive innovation, and, in particular, it is important to direct management and initiative toward the latter.

 

Initiatives and leadership that are not negative contribute to positive value standards

Of course, trusting in your management resources, in particular in your personnel and technology, and putting effort into your business battles over “invisible continents,” “immeasurable risk” and “non-consuming consumers” is important. However, in such challenges when results do not appear with time, then you should not underestimate the power of disruptive innovation. Furthermore, it is key “to always be positive.” Leadership and initiatives that acknowledge and embrace diversity and difference and that do not deny any possibility are needed.

 

Today no industry or industrial structure is immune to change and, like plate tectonics, the ground around us is always shifting. Digital technology is doing more than changing products, services, consumer experiences, and expectations; it is also radically changing value chains and business models.

Until now, Japan’s financial industry has developed by virtue of outstanding leadership and the agile introduction of technology. Celent would like to emphasize anew the importance of innovation to Japan’s financial industry, buttressed as it is by people and technology. The results of Celent’s recent innovation survey hinted at further reform to come in Japan’s financial industry. When it comes to innovation, now is an opportune time for commitments from top management and fresh initiatives from technology vendors.

Undertaking this innovation conference was a major challenge for Celent Tokyo. However, any undue anxiety completely vanished amidst the enthusiasm of survey and event participants. The Japanese financial industry is extremely positive and enthusiastic when it comes to innovation. Celent would like to express its deep gratitude to the professionals in the financial industry who took time to participate in this event in various capacities, and we hope that it will prove in some way useful to your continued success.

 

Fig. 2 Structures to Support Innovation: Financial Services Institution / Vendor Comparison

FIG2_20140703

Source: Celent Innovation Survey 2013/2014

Innovation in the Japanese Financial Services Industry, Part 1: Two Gaps

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Jul 22nd, 2014

On June 5, nearly 120 individuals from Japan’s financial sector and the financial technology sector gathered to participate in our Innovation & Insight Day Tokyo 2014. This is the first of a two-part recap providing an event overview and recounting event highlights.

The first keynote address compared the May 2014 Japan Financial Industry Innovation Survey with a similar global Celent survey conducted last October. This comparison pointed to two existing gaps.

 

Gap Number One: A Leadership Gap

1. Perception of the importance of innovation

“The next few years innovation will be extremely important. Customer expectations are changing very rapidly and it is crucial to act so as not to fall behind.” The ratio of respondents who agreed with this statement was similar in Japan and globally as shown below.

  • Global: 79%, Japan: 81%

—Conclusion: There can be no doubting the importance of innovation.

 

2. Leadership and innovation initiatives

“Our firm has an individual in charge of innovation (a chief innovation officer).”

  • Global: 11%, Japan: 7%

“We have an organization in charge of innovation (center of excellence).”

  • Global: 27%, Japan: 7%

“Innovation-related leadership relies on proponents at the CEO level.”

  • Global: 62%, Japan: 85%

—Conclusion: There was a clear lack of leadership among top management when it comes to innovation initiatives.

 

3. Three significant impediments

Global: 1) Daily work operation routines, 2) Internal habits and practices, 3) Inadequate support system.

Japan: 1) Internal habits and practices, 2) Lack of senior management support, 3) Daily work operation routines.

—Conclusion: Both globally and in Japan, in contrast to the high levels of awareness of the importance of innovation, at financial institutions there was a distinct lack of leadership.

 

Gap Number Two: Gap Between Financial Institutions and Vendors

The Japan survey asked both financial institutions and financial solution vendors about innovation-related initiatives. Responses indicated another gap here between financial institutions and these vendors.

1. Years promoting innovation

There was no significant difference between financial institutions and vendors, with both recording similar figures:

  • Three years or less: 54%, Five years or more: 30%

—Conclusion: Financial institutions seem to interpret the fact that technology-supplying vendors possess approximately the same level of experience as themselves as meaning that innovative initiatives cannot benefit from sufficient experience.

 

2. Organizational and structural

“A chief innovation officer has been appointed”

  • Vendors: 24%, Financial institutions: 7%

“Have established a center of excellence”

  • Vendors: 14%, Financial institutions: 7%

“CEO-level proponents of innovation are relied upon for leadership”

  • Vendors: 67%, Financial institutions: 85%

—Conclusion: With a slightly lower degree of reliance on upper level management for innovation leadership, vendors are slightly superior.

 

3. Departments that lead innovation

Financial institutions:

  • Business departments lead: 30%, IT departments lead: 11%

Vendor innovation proposals:

  • Directed to business departments: 14%, Directed to IT departments: 17%

Undertaking initiatives in both business and IT areas:

  • Financial institutions: 59%, Vendors: 69%

—Conclusion: There is a visible gap between financial institution innovation IT initiatives and vendor business sector initiatives.

 

4. Digital financial services initiatives

There was also a visible gap when it came to the priority level of digital financial services (innovative financial services that harness digital technology) as advocated by Celent.

  • Financial institution priority areas: Process improvements, transaction feature enhancements, product and service customization
  • Vendor initiative areas: Three sectors were overwhelmingly dominant: big data, mobile two-way communication, omnichannel

—Conclusion: Survey results indicated a general tendency for financial institutions to be more conservative and vendor proposals to be more aggressive.

 

What exactly is this gap and what does it signify? This gap is between the proposals of vendors that feature the newest or hottest technology and the initiatives of financial institutions, which have yet to recognize the advantages of or are still evaluating such technology or technological initiatives. At the very least, currently it is easy to see that, unfortunately, vendors and financial institutions are not yet on the same page when in comes to what they are looking for in initiatives. Moreover, it could be that even if new technology is applied incrementally (to drive improvement) it could also prove to be a driver of disruptive innovation.

In addition to responses that can be numerically tabulated and analyzed, the survey also allowed participants to articulate freely their own invaluable opinions. A more detailed analysis of this survey and examination of innovation in the financial industry in Japan will be available in the upcoming Celent report “Innovation in the Japanese Financial Services Industry: The Gap between Management and Initiatives.” Please be on the lookout for it.

 

Fig. 1 Comparison with Other Industries: Global / Japan Comparison

Compared with other industries, financial services firms (e.g., banks, insurers, asset managers) innovate…

FIG1_20140703

Source: Celent Innovation Survey 2013/2014

 

日本の金融機関におけるイノベーション②:パネルディスカッションから

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Jul 22nd, 2014

セレントは、去る6月5日、「イノベーション&インサイト・デー 東京 2014」を開催した。「デジタル金融サービスと新たなイノベーションの取り組み」と題した本イベントでは、セレントによるイノベーションサーベイの報告に引き続き、パネルディスカッションを実施した。
本稿は、本イベント報告の第2回である。

 

当日は、日本の金融業界を代表する5人のパネリストにご登壇頂いた。競合とディスクレーマーの強い圧力の中でのご登壇に、セレントは深く感謝申し上げたい。そして何より、パネリストのイノベーションへの情熱と経験、示唆に富む発言内容には、日本の金融業界の自信が感じられた。以下、発言者は特定せず、日本のイノベーターの「心意気」をまとめる。

 

イノベーションの動機

  • 「顧客の期待に応えるために」
  • 「ユーザニーズの高まりと、それを実現する環境や技術の普及を背景として」
  • 「顧客経験の不都合をなくすことを目的に」
  • 「人の気持ち、生活者の想いを実現する金融サービスの提供を目指して」
  • 「イノベーションとは、企業の宿命である」

 

イノベーションのドライバー

  • 「イノベーションの目的と採用する技術とのアライン(整合)」
  • 「テクノロジーとコンプライアンスの摺合せが重要」
  • 「従業員ひとりひとりの取り組み姿勢(やる気)が加速」
  • 「あくまでマネージメントの意思を反映」
  • 「爆発的な成長への誘惑を絶ち」
  • 「ユニークさに賭ける経営哲学が支える」

 

破壊的イノベーションの脅威と機会
会場からの質問、モデレータ―からの問いかけに答えて、

  • 「イノベーションの機会に、特別なものは無い。日々のマネージメントにイノベーションを反映することが重要、創業以来そうしてきたし、これからも続ける。イノベーションは自然体」
  • 「破壊的なイノベーションに、脅威は感じない。むしろ、業界全体の発展のためには、そうした荒波が必要。そうしたチャレンジは受けて立つし、そのようなチャレンジを続けてゆきたい」

 

最後に、セレントからは以下のメッセージで締めくくった。
経営者は、イノベーションに自信を
イノベーションにおける経営者の責任とリーダーシップの重要性は自明である。一方で、イノベーションは中長期にわたる旅で、時には失敗も許容する必要がある。また、長年かけて培った自らの企業文化すら打ち壊すことも稀ではない。経営者自身のイノベーションへの強烈なコミットメントを要求される。ドライバーとなるテクノロジーは日進月歩だが、確実に成功事例は増えている。経営者には、自信を持って欲しい。

 

破壊的なイノベーションと「改善(カイゼン)」を区分して、前者に取り組む必要性
破壊的なイノベーションが進展しない最大の理由は企業の外ではなく、内に存在する。特に、大企業には以下の性向が見られるが、これらはむしろ破壊的なイノベーションを回避させる。すなわち;

  • 中小企業やスタートアップと比較して、圧倒的に潤沢な資金
  • R&Dに投入できる十分な経営資源(特に、人と技術)
  • (360度のマネージメントが必要な)多様な事業部門と多くの競合
  • 孤立する「ブラックシープ(黒い羊)」

イノベーションを放置すれば、カニバリゼーション(共食い)は、自社のコア業務領域ばかりでなく、あらゆるニュービジネスにおいて発生してしまうであろう。イノベーターを嫌われ者の黒い羊として追放させないために、コア業務における日々のカイゼン(改善)の積み上げと、破壊的なイノベーションを峻別し、後者にこそ、マネージメントとイニシアチブを向けることが重要である。

 

「否定しない」リーダーシップとイニシアチブ
自社の経営資源、特に人材と技術力を信じ、「見えない大陸」や「測れないリスク」、「無消費な消費者」との戦いに傾注することが大切だ。遅々として成果が表れないこうした挑戦における、破壊的なイノベーションの威力を軽視してはならない。そして、常に「肯定的であること」。多様性や異質であること是認し、あらゆる可能性を否定しないリーダーシップとイニシアチブが待望される。

 

今日、産業構造が変わらない業界などどこにもなく、その地殻変動は随所で進展している。デジタルテクノロジーは、商品やサービス、顧客のエクスペリエンスや期待を変化させるだけでなく、価値連鎖やビジネスモデルそのものも、激変させている。

日本の金融業界は、これまでも、卓越したリーダーシップと俊敏な技術導入で発展して来た。人とテクノロジーが支える日本の金融業界、そこでのイノベーションの重要性をセレントは再度強調したい。2つのイノベーションサーベイの結果は、日本の金融業界に一層の変革を促す示唆を与えた。今こそ、イノベーションに関して、トップマネージメントのコミットメントと、テクノロジーベンダーのイニチアチブが期待される。

本イノベーションイベントは、セレント東京にとって、大きな挑戦だったが、サーベイとカンファレンスへの参加者の熱気は、そうした杞憂を一掃した。日本の金融業界は、イノベーションに対して極めて積極的かつ熱心である。セレントは、様々な形で本イベントにご参加下さった、金融業界のプロフェッショナルの皆様に深く感謝し、日本の金融機関におけるイノベーションの成功を熱望する。

 

図 2. イノベーションを支援する組織(金融機関・ベンダー比較)

Innovation survey2

出典: セレント「イノベーションサーベイ」2013/2014

日本の金融機関におけるイノベーション①:2つのギャップ

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Jul 22nd, 2014

6月5日、日本の金融業界と金融テクノロジー業界から約120名のご参加を頂き、「イノベーション&インサイト・デー 東京 2014」を開催した。本稿では、本イベントの要諦を2回に分けて報告する。

まず、基調講演において、先月実施した「日本の金融業界におけるイノベーションサーベイ」と、昨年10月にグローバルに実施した調査結果を比較し、そこからの示唆として2つのギャップを報告した。

 

その1:リーダーシップ・ギャップ
1. 重要性認識
「これから数年間、イノベーションは非常に重要。顧客期待は急速に変化しており、遅れないように対応する必要がある」との回答の割合は以下の通りであった。

  • グローバル:79%、日本:81%

・・・・イノベーションの重要性に疑う余地はない。

 

2. イノベーションに取り組むリーダーシップ
「イノベーションの責任者(チーフ・イノベーション・オフィサー)がいる」

  • グローバル:11%、日本:7%

「イノベーションの専門組織(イノベーション・CoE)がいる」

  • グローバル:27% 日本:7%

「イノベーションに関するリーダーシップはCEOレベルの推進者に頼る」

  • グローバル:62%、日本:85%

・・・・イノベーションに対する取り組みについて、トップマネージメントのリーダーシップ不足は明らかであった。

 

3. 3大阻害要因

  • グローバル:①日常業務のルーチン②社内慣習③サポート体制の不備
  • 日本:①社内慣習②経営幹部のサポート不足③日常業務のルーチン

・・・・グローバルにも日本でも、金融機関におけるイノベーションは、その重要性の認識に反して、リーダーシップ不足は鮮明であった。

 

その2:金融機関とベンダー間のギャップ
日本サーベイでは、イノベーションに関するイニシアチブを、金融機関と金融ソリューションベンダーの両セグメントに尋ねたが、両者の間にはもう一つのギャップが垣間見られた。
1. イノベーション推進の経験年数

  • 金融機関とベンダーの間で大きな差異はなく、両者とも、
  • 3年未満:54%、 5年以上:3割強

・・・・金融機関からすると、テクノロジーを供給するベンダーのイノベーションに関する経験は同程度、そのイニシアチブが十分に享受出来る状態では無いとみなされる。

 

2. 組織・体制
「チーフ・イノベーション・オフィサーを任命済み」

  • ベンダー:24%、金融機関:7%

「イノベーション・CoEを任命済み」

  • ベンダー:14%、金融機関:7%

「リーダーシップをCEOレベルの推進者に頼る」

  • ベンダー:67%、金融機関:85%

・・・・ベンダーに一日の長が見られた。

 

3. イノベーションを主導する部門

  • 金融機関:ビジネス部門が主導:30%、IT部門が主導:11%
  • ベンダーのイノベーション提案:ビジネス部門向けは14%、IT部門向け:17%
  • ビジネス・IT両部門での取り組み:金融機関:59%、ベンダー:69%

・・・・・金融機関のイノベーションにおけるIT部門のイニシアチブと、ベンダーのビジネス部門に対するイニシアチブに関して、ギャップが垣間見られた。

 

4. 「デジタル金融サービス」への取り組み
セレントが提唱する、「デジタル金融サービス」(デジタル技術を活用した、革新的な金融サービスの提供)への取り組み状況においても、金融機関とベンダーの優先順位に明らかにギャップが見られた。

  • 金融機関の優先分野:「プロセス改善」、「取引機能拡張」、「商品・サービスのカストマイズ」
  • ベンダーの取り組み分野:群を抜いて「ビックデータ」、「モバイルと双方向通信」、「オムニチャネル」

・・・・金融機関は総じてコンサバティブ、一方、ベンダーはアグレッシブな提案姿勢が浮かび上がった。

 

このギャップは何を意味するのか?新しい(若しくは、流行の)テクノロジーを積極的に提案するベンダーと、その有効性を見出せない(若しくは、評価中の)金融機関の取り組みギャップであろうか?少なくとも、現時点では両者のイニシアチブがきっちりとシンクロしていないことは、残念ながら、容易に想定されよう。また、新たなテクノロジーが、インクリメンタルな(カイゼン的な)イノベーションには適用されても、ディスラプティブな(破壊的な)イノベーションのドライバーとなれているか?
サーベイでは、これら数値で分析出来る項目に加え、自由回答における参加者の貴重な「つぶやき」を記録した。それらの詳細と分析は、近刊のセレントレポート「日本の金融機関におけるイノベーション:マネージメントとイニシアチブのギャップ」をご参照願いたい。

http://www.celent.com/ja/reports/32573

 

図 1. 他業界と比較した、金融機関のイノベーションの進捗レベル認識(グローバル比較)

Innovation survey1

出典:セレント「イノベーションサーベイ」2013/2014

 

データベース・アズ・ア・サービス (DBaaS): グローバル金融機関におけるプライベートクラウド実装

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May 23rd, 2014

春は、コンベンションの季節。今年の日本は、アベノミクス以上に、イノベーションのキーワードで沸き立っている。

2014年4月の東京において開催されたオラクルのイベントにおいても、各業界をリードする国内外の企業のキーパーソンを東京に迎え、イノベーションの実践事例が多数に講演された。

「コスト削減と戦略投資をどのように行うのかは、システム部門における永遠の課題です。近年、クラウドが普及してきましたが、上記の課題をバランスよく解決する武器にも見えます。しかし、金融機関で上手に活用されている事案が少なく、『クラウド』を戦略的に活用しているグローバル金融機関の事例を、金融機関における適切なIT戦略・プライベートクラウド戦略としてご紹介します」、と事例金融機関のCTOによるプレゼンテーションに先立って、オラクル・コーポレーションのシニアディレクターはこのように挨拶した。本事例「グローバル金融機関におけるデータベースのプライベートクラウドへの移行」に、セレントは「ITソーシングモデルのひとつの理想像」を見出した。

本事例のキーポイントを、セレントは以下の通り整理する。

1. グローバル金融機関におけるIT基盤に対する4つの期待:

  • オンディマンドサービス
  • プロビジョニングの迅速性、弾力性
  • サービスの計測可能性
  • 監査とセキュリティ対応

2. 期待を実現した4つの原則:

  • サービスのカタログ化とセルフサービス
  • 適用技術の標準化
  • リスク、セキュリティの一元管理
  • 運用保守の標準化

3. 本事例を成功に導いた7つのKFS:

  • プログラム管理
  • エンタープライズアーキテクチャ(EA)アプローチとサービス定義
  • エコシステム(LCM)志向
  • サポートモデル
  • セルフサービス
  • インベントリ―とデータ品質管理
  • ユーザ部門とのコミュニケーションとIT需要管理

10,000を超える物理ノードと、300近いプロビジョニング・プロファイルを、プライベートクラウドに移行したという大規模事例であることに加え、キャピタルマーケットの存在する全世界でフォロー・ザ・サン・オペレーションを実現している多国籍金融機関のITインフラは、そのミッションクリティカルの度合において群を抜く。そして何よりも、ベンダーの製品・サービス提供に加え、DBプロビジョニング運用とその保守を自行で実施するという、ITソーシングモデルの理想形をそこに見た。その際、EAの実践が成功の鍵であったことは容易に想定出来る。もちろん、高度なIT運用能力を保持するトップティア金融機関における最先端の事例ではあるが、そのアジェイルさは、日系金融機関に対する大きな刺激となったに違いない。

セレントは、金融機関におけるクラウド適用[1]をはじめとした、革新的なIT活用の取り組みを多数レポートしてきた。また最近時、1) デジタル&オムニチャネル、2) イノベーション&エマージングテクノロジー、3) レガシー&エコシステムマイグレーション、の3分野にフォーカス[2]し、金融業界におけるイノベーティブな取り組みをリサーチしている。多くの来場者にとって本事例は、コスト削減を超えて、新たな事業価値を生み出すテクノロジー・プラットフォームとしてのITを見直す契機となろう。正に、エマージングなテクノロジーを用いた、エコシステムマイグレーションの好事例とみなされる。

ソリューションを基軸とするベンダーも、ITサービスを基軸とするベンダーも、ハードウェアやソフトウェア、システム構築、システム運用、メンテナンスを垂直統合した事業形態で、統合ソリューションをサービス提供している。加えて、各種の共同システムをはじめとして、金融業界のシステムインフラは、既にサービス形態での利用が可能である。これまでの、オンプレミスを前提としたSIベンダーによるシステム構築に加え、金融機関のITソーシングモデルも、急速に多様化するであろう。

図 : 金融機関におけるとITソーシングモデルの変化

sourcing models_JAPANESE

出典: セレント

セレントは、イノベーションとは、旧方式から飛躍して新方式を導入すること、そして、その革新の実行者を、企業家(アントレプレナー:entrepreneur)と呼ぶ。そして、常にテクノロジーは、変化を通じて顧客価値を実現する触媒であると信じる。新たなテクノロジーを味方に付けた金融機関のみが勝ち残る、優勝劣敗の時代が到来している。そのひとつが、DBaaSであろう。

[1]「クラウドが加速する日本の金融システム・金融IT産業のサービス化:鍵を握るモジュール化技術」(2011.7) など http://www.celent.com/ja/reports/29274

[2]「2014年モデルバンク パート1:デジタル/オムニチャネル・バンキング」(2014.4) など http://www.celent.com/ja/reports/32274

Database as a Service (DBaaS): Private Cloud Implementation at Global Financial Institutions

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May 23rd, 2014

Spring is here and with it so is convention season. This year in Japan, innovation is proving to be an even hotter buzzword than Abenomics.

Innovation was prominent at an Oracle convention event that took place in late April. IT experts from across industries and around the globe converged in Tokyo where they presented several instructive case studies on innovation in practice.

In kicking off the event and prior to a notable presentation by the CTO of a major financial institution, an Oracle senior director noted that reducing costs and investing strategically are eternal challenges in the systems sector. He pointed out that in recent years, the cloud has spread and emerged as a potentially powerful weapon to help solve in a balanced way these dual challenges of cost reduction and strategic investment, although there are as yet few examples of financial institutions using the cloud well. As such, the Oracle event was dedicated to introducing cases in which financial institutions have harnessed the cloud successfully in terms of IT strategies and private cloud strategies.

At this event, Celent discovered one ideal IT sourcing model initiative that epitomizes how a financial institution should migrate a global database to a private cloud.

Celent has broken down and organized the key points of this case study as follows.

1. Global financial institutions expect great things from the cloud when it comes to IT infrastructure in these four areas:

  • On-demand services
  • Prompt and flexible provisioning
  • More quantifiable services
  • Facilitating audits and security

2. The four principles that led to the achievement of these expectations:

  • Cataloguing of services and self-service
  • Standardization of applied technologies
  • Unifying risk and security management
  • Standardization of operation and maintenance

3. Seven key factors to success in this case:

  • Program management
  • Enterprise architecture (EA) approach and service definition
  • Ecosystem-focused (life cycle management) approach
  • Support model
  • Self-service
  • Inventory and data quality management
  • IT demand management and communication with line of business

In addition to the scale of this case, which involved the migration of over 10,000 nodes and nearly 300 instances of provisioning profiles, the initiative also allowed the multinational company in question to achieve a follow-the-sun operation for capital markets worldwide. The firm has created an outstanding IT infrastructure in terms of mission critical robustness. However, more than anything, this case study approached the ideal in terms of IT sourcing models in that it enables self-implementation of database provisioning operations and management in addition to being able to provide vendor products and services. It is easy to imagine that it was this EA that proved the key to success. Of course, while this is a case study of advanced IT operational capacity at a top-tier financial institution, the agile nature of this initiative was clearly stimulating to the Japanese financial institutions that were in attendance.

Celent has published countless reports on innovative IT applications and initiatives including on how financial institutions can and are using the cloud to enhance their businesses[1]. In particular, recent Celent research has focused on IT and innovation in the following three areas: digital and omnichannel, innovation and emerging technologies, and legacy and ecosystem migration[2]. For many participants at the convention, this case study likely proffered more than a means to reduce costs, but also a chance to revisit their IT approaches to create a technology platform that fosters greater business operation value. This case is a shining example of ecosystem migration using emerging technology.

Both vendors that focus on providing solutions as well as vendors that focus on IT services are offering integrated solution services that vertically integrate hardware, software, system building, system operation and maintenance. In addition, financial institution infrastructures including many types of shared systems are available for use in their current service formats.Above and beyond the system building of SI vendors seen so far rooted in on-premise approaches, Celent expects the IT sourcing models of financial institutions to diversify at a rapid clip.

 

Fig: Changes in sourcing models

sourcing models_ENGLISH

Source: Celent

 

Celent defines innovation as introducing novel approaches that improve on what has come before and Celent calls individuals that orchestrate this innovation entrepreneurs. Celent also believes that technology offers a medium to change that can yield greater value for customers. We are in an era of intensifying competition and only the financial institutions that make technology their friend and leverage it intelligently will remain when the dust settles. And DBaaS is a prime example of this in practice.

 

[1] See Celent’s report, Cloud Computing in the Japanese Financial Services Industry, November 2011 http://www.celent.com/reports/cloud-computing-japanese-financial-services-industry

[2] See Celent’s report, Celent Model Bank 2014, Part 1: Digital and Omnichannel Banking, April 2014, among others http://www.celent.com/reports/celent-model-bank-2014-part-1-digital-and-omnichannel-banking

6.11.2014 Celent Webinar: How to Better Leverage Celent

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May 12th, 2014

Celent CEO, Craig Weber

This event is free to attend and we expect you to walk away with a better view as to how you can get more from working with us. For more information, please contact Anna Griem at +1 603 582 6137 or agriem@celent.com.

Please click here for more information.

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E-money in Japan and South Korea

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May 1st, 2014

Japan and South Korea are among the leading countries which have tried to spread the use of e-money from an early stage. Due to the different backgrounds they have, they have been going the separate paths for e-money growth.

In recent years, the Japanese e-money market has emerged as one of the important payment methods. Especially with the consumption tax rise from April 2014, the e-money market has received more attention because the usage of loose coins would increase due to the consumption tax rise from 5% to 8%.

On the other hand, in South Korea, the e-money market growth has been sluggish because of the heavy usage of credit cards and check cards. Although there are two major e-money providers, T-money and Cashbee, South Korean credit cards and check cards are available for not only big purchases but also for small purchases so consumers do not recognize the need for e-money.

In Japan, Suica, e-money from East Japan Railway Company and nanaco, e-money from Seven & I Holdings, exceeded 100 million transactions for a month in March 2014. It is the first time for nanaco to exceed 100 million transactions. All e-money providers have said that transaction volume has been growing. Celent believes that this trend will continue in the future by improving customer experience although one of the obstacles in the way of the e-money market growth has been considered the lack of the customer experience.

In South Korea, Kakao Talk, one of the most popular social networking services in South Korea announced that they will launch a mobile wallet service called “Bank Wallet Kakao” in the first half of this year. At the very beginning, this will be used for customer to customer (C2C) payment and will expand to business to customer (B2C) payment.

For both countries, the e-money market has entered a new phase although the reasons for growth are different. From the case studies of both countries, we can learn that e-money has diverse potential. I believe that e-money will create a new value and become a more accepted payment method.

Beyond HFT

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Apr 30th, 2014

Last week I attended the Tokyo Financial Information Summit, put on by Interactive Media. The event was interesting from a number of perspectives. This event focuses on the capital markets; attendees are usually domestic sell side and buy side firms and vendors, including global firms active in Japan. This year there was good representation from around Asia ex-Japan as well; possibly attracted by the new volatility in Japan’s stock market. The new activity in the market was set off by the government’s Abenomics policies aimed at reinvigorating the Japanese economy. But I suspect the fact that Japan’s stock market is traded on an increasingly low latency and fragmented market structure gives some extra juice to the engine.

Speaking of high frequency trading, Celent’s presentation at the event pointed out that HFT volumes have fallen from their peak (at the time of the financial crisis) and that HFT revenues have fallen drastically from this peak. In response to this trend, as well as the severe cost pressures in the post-GFC period, cutting-edge firms seeking to maintain profitable trading operations are removing themselves from the low latency arms race. Instead, firms are seeking to maximize the potential of their existing low-latency infrastructures by investing in real-time analytics and other new capabilities to support smarter trading. HFT is not dead, but firms are moving beyond pure horsepower to more nuanced strategies.

Interestingly, this theme was echoed by the buy and sell side participants in a panel at the event moderated by my colleague, Celent Senior Analyst Eiichiro Yanagawa. Even though HFT levels in Japan, at around 25 – 35% of trading, have probably not reached their peak, firms are already pulling out of the ultra-low latency arms race–or deciding not to enter it in the first place. The message was that for many firms it is not advisable to enter a race where they are already outgunned. Instead they should focus on smarter trading that may leverage the exchanges’ low latency environment, but rely on the specific capabilities and strategies of a firm and its traders.

Looking at this discussion in a global context, it seems interesting and not a little ironic that just as regulators are preparing to strike against HFT, the industry has in some sense already started to move beyond it.

Quotes from the Innovation Roundtable

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Apr 25th, 2014

They said it couldn’t be done, but we held the latest installment in Celent’s series of innovation roundtables in Tokyo recently. Our innovation roundtables put the focus squarely on interactive discussion among the participants. This is a relatively untried model in Japan, where events typically take the form of conventional conferences with presentations. We’re glad we tried it though, because we got a very interesting line-up of firms. Participants included the whole spectrum: banks, capital markets firms, and insurers; Japanese and foreign firms; traditional mega-institutions and alternative new entrants.

The discussion was lively; below are some quick notes I took of some of the more interesting comments made, to capture a bit of the flavor of the day.

Why Innovate?
“Innovation is not the goal, it is a method and a tactic.”

“We need to innovate because it has become difficult to differentiate us from our competitors.”

“In today’s environment, innovation is necessary if you want to stay profitable.”

Paths to Innovation
“Incremental innovation is an axymoron. You can’t innovate by increments; innovation requires a big bang change.”

“It might be possible to rearrange existing elements to create something new.”

“When to innovate? If our clients think a new service is interesting, we try and create it for them and see if it succeeds.”

“Innovation needs to be business driven.”

“Financial institutions need to have an innovation division; an incubation unit that accumulates ideas from throughout the company.”

IT and Innovation
“IT is not the impetus for innovation, but because IT inevitably evolves, that creates need for innovation.”

“Legacy is a barrier: it is hard to throw things away.”

Cultural Challenges
“We need to justify ROI on any investment each fiscal year. It is hard to show this on an innovation project.”

“If you think about it, financial institutions don’t even have R&D departments.”

Quote of the Day
“Changing company culture is really about changing oneself. I personally enjoy innovation and change. Innovative culture is about getting a bunch of people together who enjoy change.”