With digital banks leading the way, how should financial institutions in Asia Pacific innovate to resiliently enhance customer experience, providing both convenience and security?

Despite compliance to standards such as PCI DSS improving significantly in the financial services sector, the cyberthreats organizations face today are more sophisticated and evasive than they were two years ago.

As the industry prepares to implement PCI DSS v4.0 by 2024, what strategies should financial institutions in Asia Pacific have in place to meet the challenges ahead?

DigiconAsia looked at what these challenges and strategies could be with Simon Davies, SVP and General Manager, APAC, Splunk.

Why do you think observability is a key strategy for the regional financial services industry?

Simon Davies, SVP and General Manager, APAC, Splunk

Simon Davies (SD): Observability is a key strategy for regional financial services, be they traditional or digital banks, because it enables banks and financial institutions (FIs) to improve operational efficiency, create opportunities to innovate, and, importantly, offer a delightful customer experience at the end of the day.

Compared to beginners, the most sophisticated observability practitioners are able to cut downtime costs by a significant 90% – from an estimated US$23.8 million annually to just US$2.5 million, according to our 2022 Observability report.

We also found that such Leaders are more agile and able to recover more quickly – reporting a 69% better mean-time-to-resolution for unplanned downtime or performance degradation.

How can FIs remove complexity in their environment, innovate effectively, and improve customer experience?

SD: By strengthening their use of observability, FIs are able to:

    • Predict potential problems before their customers notice any errors
    • Achieve end-to-end visibility across their entire technology systems including both on-premise and public clouds
    • Know precisely where to look as soon as problems occur

For example, Hyphen Group, a leading financial technology company in Southeast Asia, was faced with increasing IT complexity due to its continued business growth. The company was able to slash issue resolution time from hours to minutes thanks to their adoption of observability tools which helped provide a unified experience for collecting and monitoring metrics, logs, and traces from common data sources.

For the fintech firm, this translates to the ability to streamline processes and accelerate troubleshooting and infrastructure deployment, in turn allowing teams to focus their time on adding value to the business.

How can observability help digital banks in Asia Pacific address the challenges that they are facing?

SD: Observability provides banks with real-time monitoring, investigation, and end-to-end visibility, using a holistic, consolidated data set across their multiple cloud environments – which traditional monitoring tools simply cannot deliver. In the event of an outage, digital banks can rapidly, and accurately, pinpoint the cause and direct the right teams for corrective action, swiftly mitigating any impact to customers.

Furthermore, studies have forecast that global cashless payment volumes will increase by over 80% from 2020 to 2025, from about 1 trillion transactions to almost 1.9 trillion, and potentially triple by 2030. The Asia Pacific region is expected to grow fastest, with cashless transaction volume growing by 109% until 2025 and then by 76% from 2025 to 2030, followed by Africa and Europe. This increase in payment volumes means that Asia’s digital banks will need to ensure their systems can support the accelerating number of transactions – as well as staying nimble and adapt to changing regulatory requirements and ensuring security and minimal downtime to their customers (for example, mitigating outages due to cyber attacks).

What enhancements to their cloud platforms should financial service providers deploy to ensure security and resiliency, while improving convenience and service for customers?

SD: When it comes to cloud investments, we know that the foremost objectives for leaders are to increase business agility, cost flexibility, and strengthen their ability to access/analyze/act on data/provide insights, according to our study with Harvard Business Review Analytic Services.

Source: Harvard Business Review Analytic Services survey, October 2021

So, we can’t stress enough that with more observability across their data and technology platforms, banks and FIs will gain greater insights and free up more time to run other strategic initiatives, such as improving customer experiences. Conversely, those that lack visibility into all their systems and the ability to act on their data face higher risks of security breaches and data loss.

For example, Nubank, one of the largest digital financial services platforms in the world, was looking for an approach to operate without physical locations. Their goal is to help its 60 million digital banking customers in Latin America save time and bank fees. With the help of Splunk’s Observability solutions, the Nubank engineering team was able to interact with security professionals and compliance teams under one common language. From service logging to security and compliance, Nubank could gather the necessary information needed to derive insights regarding how systems operate and how services are delivered to customers.

The result: Nubank customers avoided paying an estimated US$4.6 billion in bank fees and saved 113 million hours in wait time.

In Southeast Asia, 2C2P, a robust payment company that offers over 250 payment methods, was able to simplify their processes, secure their cloud operations and remain compliant with Amazon Web Services regulatory requirements by gaining full visibility into their cloud assets with the Splunk platform.

Ultimately, observability helps FIs remove the barriers between data and action, affording them greater knowledge of what is happening within their organisations, and transform what may initially seem like typical data into meaningful actions and insights.

In a highly competitive industry like Financial Services, being agile is table stakes and observability has proven to be a powerful practice that FIs can truly lean into to enhance business resilience and innovation.