Predictions from cloud leader Teradata for financial services
ESG will define the bank in 2022
Following the commitments made at COP26, the industry will eagerly await new regulations and legislation that will impact the banking sector. Banks have a critical role to play in translating commitments into action by influencing where, how and when money is spent. While regulators, like the Bank of England and the European Union, have so far refrained from directing cash flows to more than less sustainable businesses, pressures are mounting on banks to they exercise their considerable financial power in support of climate commitments.
2022 will see sustainable development reporting become as important as regulatory reporting. To do this, banks will need granular information on a multitude of factors that determine environmental impacts over time and risks across all industries and all kinds of assets and investments. The challenges are not negligible, especially with regard to the quality and comparability of data on emissions in different sectors. However, banks will play a role both as customers and as data providers that can drive more positive environmental outcomes.
2022 will be a pivotal year for cloud migration in banking, creating systemic risks
Too big to fail once applied exclusively to banks and financial services institutions, but now regulators around the world are concerned about a different type of organization creating systemic risks to the global financial system. As more banks move their business-critical processes to the cloud – and we predict this will increase through 2022 – the reliance on a very small number of dominant cloud service providers creates risks for operational resilience. Regulators are likely to act quickly over the coming year to ensure that these risks are mitigated and that banks can handle stressed out cloud providers when needed. To prepare for the inevitable tests of ability to handle these stressed outings and actual potential cloud failures, as well as to address regulatory concerns, banks will begin to migrate to hybrid and connected multi-cloud platforms, enabling a more comprehensive approach. flexible migration to the cloud
AI in Banking to Shift from ‘Hype’ to Real Progress
The number of bank branches in the European Union increased from around 238,000 in 2008 to 174,000 at the end of 2018, according to figures from the European Banking Federation. It has accelerated further due to the pandemic, with more and more customers moving their banking online out of necessity. We will continue to see further branch closures in 2022 in an effort to increase efficiency and reduce headcount as banks strive to further digitize processes.
Thanks to these efficiency gains, banks will have more resources to allocate to ESG, as well as customer transformation. Part of the customer’s transformation journey will be focused on adopting AI, which has been the subject of a lot of hype over the past few years without achieving any noticeable traction to date. That will change in 2022 as banks look to transform their approach to analytics to improve their stagnant analytics capabilities.