Industry
Banking
Banking Services Transformation: Unlocking Exponential Value
Solution
Consulting
TCS Consulting Services to Achieve Success in the Digital Era
Highlights
- Combining multi-access edge computing (MEC) and fifth-generation (5G) wireless technology will help BFSI firms adopt a decentralized approach to designing and managing their IT systems and infrastructure.
- It will allow firms digital sovereign governance while enabling them to leverage the power of emerging technologies.
- A federated design architecture will facilitate greater flexibility, reduced complexity, increased collaboration between entities, and efficient decision-making.
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Abstract
Multi-access edge computing (MEC) and fifth-generation (5G) wireless technology offer enormous opportunities in the banking, financial services, and insurance (BFSI) industry.
Combining them with cloud will enable firms to formulate an integrated business and technology strategy that is at the heart of enterprise architecture transformation. It will help firms establish a federated, decentralized approach to designing and managing their IT systems and infrastructure. Further, it will allow for digital sovereign governance while enabling BFSI firms to effectively use digital technologies. The advantages of federated design for BFSI firms are many: greater flexibility, reduced complexity, increased collaboration between entities, efficient decision-making, improved throughput, agility to build capabilities, data democratization, superior compliance, and improved data privacy. We discuss the changes that 5G and MEC can introduce in the BFSI industry and how firms must prepare for them.
Innovation in services
Perpetual innovation is on the boardroom agenda for leading BFSI institutions.
Consistent and effective innovation to deliver value to consumers is no longer a nice-to-have but a business imperative. 5G technology, along with MEC, offers immense potential for innovation in the BFSI industry.
Incumbent BFSI firms are struggling to overcome legacy modernization challenges while grappling with ever-evolving next-gen technologies. On the other hand, unhindered by the legacy burden, challenger institutions are innovating rapidly. This innovation is powered by a mix of domain-driven microservices design and a cloud-native interoperable architecture framework.
When it comes to innovation, traditional BFSI institutions can leverage the customer trust earned over decades and rich experience gained in all areas of financial services. Ensuring continuous innovation will require firms to factor in many new and emerging dimensions and drive consistent innovation in areas such as customer experience, financial crime prevention, open banking, and digital transformation.
5G and MEC are two key dimensions that BFSI firms must focus on while defining an enterprise architecture transformation strategy aimed at creating new value. In our view, the powerful combination of 5G, MEC, and cloud computing will significantly enhance customer lifetime value (CLV), improve net promoter score (NPS), and increase the returns on investment (RoI) in a digital and purpose-centric ecosystem. It will also help BFSI firms manage the obligations across data privacy, compliance, and digital governance sovereignty.
How 5G and MEC work
The 5G technology promises speed, while MEC brings computing, storage, and data to the edge of the network, closer to the customer.
With higher bandwidth, improved privacy and reliability, and ultra-low latency, BFSI firms can store, process, and analyze data at the edge of the network rather than on the cloud. Currently, data travels to the cloud for many application processing needs, while some compute-intensive applications depend on expensive in-memory solutions to achieve limited real-time intelligence and comply with industry standards and SLAs. With an integrated 5G and MEC strategy that will enable balanced central and edge (decentralized) processing, BFSI firms will be equipped to build new capabilities and create innovative solutions with unprecedented value propositions (see Figure 1).
5G and edge: New capabilities and innovative solutions
Multifaceted impact
BFSI firms are expected to reap a host of benefits from a federated architecture.
These include new revenue streams, best-in-class customer experience, unlimited real-time analytics with ultra-low latency, superior contact center and ATM operations, and next-level mobile and device user experience. Other advantages are reduced cloud storage and processing costs, enhanced security and compliance, and improved fraud and financial crime management. The profound impact of 5G and MEC on financial institutions’ architecture strategies is real, and global leaders have recognized and acknowledged its promise and potential.
Figure 2 shows the various areas in the BFSI industry that can benefit from the adoption of 5G and MEC along with cloud.
Business benefits across the BFSI spectrum
Why adopt 5G and MEC
BFSI firms have embarked on cloud transformation in the last few years and are at different stages of the journey.
Many such transformation programs are more cloud-enabled rather than cloud-native in nature, with some of them leveraging third-party (SaaS) based cloud services. These transformation strategies can now be readjusted to include 5G and MEC to reap enormous benefits. The new trio of 5G, edge network, and cloud is an ideal and expanded terrain, offering unprecedented opportunities to improve business strategies and technology architecture. We believe that BFSI firms must adopt a layered, integrated, and strategic approach (see Figure 3) underpinned by 5G, MEC, and cloud to enable optimal data for storage and processing in each layer and unlock synergies by interacting with backend cloud applications.
Layered 5G, MEC, and cloud architecture design
The way forward
With 5G and MEC, opportunities galore for financial institutions.
Unlimited real-time everything, increasing volume of devices and data, the rise of hyperscalers, and a combination of modern technologies will change the face of customer experience and risk management and enhance returns on investment (RoI) for financial institutions. Today, the bandwidth spectrum and data transportation layer are bottlenecks, and consumers have to wait in front of a human adviser or machine to consume services. Computing abilities are far superior and faster than human reactions. However, computing and network have not created the synergies needed to unleash the full potential. The combination of 5G and MEC is the final tipping point needed to bring together machines, computing, and network, and make them faster than humans. Financial institutions must leverage this unbeatable combination to fast-track their digital transformation journey.
