June 23, 2011 Whether the result of changing regulation and compliance, data center consolidation, virtualization and cloud initiatives, or a need to modernize, the data center is changing.

Central to the June issue of Bank Systems & Technology is the transformation of bank data centers and trends covering data management. As an extension to that issue, the following is a brief Q&A with Austin Trippensee, director, Financial Services Risk Applications, Oracle Financial Services.

BS&T: What are the top priorities in data center modernization among banks and financial institutions?

Austin Trippensee: Financial services organizations' priorities for data center modernization, in part, reflect those of organizations in other vertical industries. For example, they include a focus on consolidation, virtualization and/or cloud computing as well as a commitment to greater efficiency - both computational and energy efficiency. Financial services also seek to make their data centers more cost effective and manageable by integrating and optimizing their entire technology stack.

Specific to the industry, financial services organizations are reassessing their data centers in light of a changing regulatory environment - Dodd-Frank and Basel III, among others - and the new analytical and extreme processing requirements that come with heightened oversight. For example, it is increasingly important for financial institutions to support their operations with analytical information that can be delivered in real time for in-transaction decision making. They are looking to enable the extreme performance, scalability, and manageability needed to process complex analytical scenarios previously thought impractical, and deliver answers faster than ever before.

Beyond compliance requirements, there is increasing pressure for banks to support their operations with analytical information that can be delivered in time for in-transaction decision-making. The data center is on the front lines of this quest.

These new online requirements stand in stark technological contrast to traditional, "offline" analytical applications used solely to support senior management decisions. Real-time pricing, real-time decisions in CRM, fraud detection and surveillance and algorithmic trading all represent an emerging class of analytical workflows that are needed "on demand," and where the delivery of "business intelligence" is no longer a periodic activity within a defined time window.

BS&T: Describe some of the new types of data or novel uses of data in financial services? Are banks effectively using data as an asset? If so, how?

Trippensee: Customer and transactional data have long been staples of the financial services data center environment. The important change is how financial services organizations are using their data to enhance their overall performance as well as ensure compliance. For example, they are increasingly leveraging sophisticated analytical applications designed to enable more dynamic and accurate identification, analysis and reporting of liquidity risk, credit risk, operational and market risk, risk-adjusted performance, customer profitability, potential fraud or money laundering activities and more. The data center, and more specifically, the data warehouse, is the nerve center for all of these applications and analytical capabilities.

Banks see the potential of their data and are actively working to more effectively leverage, mine and analyze the valuable data that they hold. Enterprise-wide visibility is fundamental to this objective, and financial organizations have long struggled with this goal. Modern applications, such as Oracle Financial Services Analytical Applications are designed to address this specific goal, offering an integrated approach that removes information silos to enable unprecedented visibility.

BS&T: From a data center hardware perspective, are the tools available to banks becoming more specific or more general? Why?

Trippensee: Organizations today need applications that not only meet specific functional requirements but applications that are capable of supporting ever-changing cross-functional requirements, as well. A example of this would be the recent focus on liquidity risk which expands upon the traditional ALM system's capabilities around interest rate risk to include factors like behavior, discount rates, growth, etc. Oracle provides a single, common, unified infrastructure that fully supports not only the specific requirements, but can also allow users to leverage rules, models, and methodologies across the organization.

BS&T: What does the cloud mean to a financial institution? How are banks utilizing the cloud and why? Are financial institutions taking advantage of public cloud services or building private clouds? What does it take to get this type of environment up and running?

Trippensee: Cloud computing is a natural evolution of datacenter trends, such as virtualization, consolidation and shared services. For financial institutions, the cloud offers vast potential with faster computing speeds, broader bandwidth capabilities and lower total cost of ownership. It can also support changing IT requirements through an infrastructure that can quickly evolve (or scale). As important, the cloud offers organizations flexibility in IT using a very scalable, secure and configurable environment. The financial services industry is definitely taking notice and are working collaboratively with vendors to ensure data security and greater efficiencies.

ABOUT THE AUTHOR