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5 Reasons Why Financial Institutions Need Managed IT
It is all about the now. Consumers crave instant gratification. That means businesses need to support every customer at any time from anywhere—and the finance industry is no exception. With nearly 70% of millennials utilizing mobile banking applications and 361 million people sending money via Paypal, server downtime in the finance sector is intolerable.
Here’s why banks and financial institutions need managed IT to keep customers satisfied.
The finance sector is known for its outdated legacy system architecture that cannot handle increasing data volume. Most high street banks had more than 10 system shutdowns in 2018, while six of the major banks had at least one downtime incident every two weeks. In a Which? Money report, there were 302 reports of IT system failures impacting customer transactions between April and December 2018—that averages one incident every day. The cost and complexity of updating such systems prohibits banks and financial firms from progressing their technology for fear of impacting business. According to the Powering Potential survey, over half of IT professionals struggle to keep up with the pace of technology, with two in 10 saying they had fallen behind the pace of change.
2. Security & Compliance
Outdated technology leads to impaired security. System glitches cause 27% of financial data breaches, according to IBM and the Ponemon Institute. In Varonis’ 2019 Data Risk Report, 21% of sensitive files in financial services were exposed, averaging 352,771 unprotected files and resulting in non-compliance. Fenergo reported that 198 fines for Anti-Money Laundering (AML), Know your Customer (KYC), data privacy, and MiFID (Markets in Financial Instruments Directive) regulations were levied against financial institutions in 2020—a 141% a year-on-year increase. As a result, 48% of customers believe companies poorly protect their personal information, according to a Salesforce survey, and 59% believe their personal information is vulnerable to a security breach.
System outages at financial institutions cost an average of $9.3 million per hour of downtime. It is not just large companies that rack up a high bill of downtime costs. ITIC’s 11th annual Hourly Cost of Downtime Survey showed that 47% of SMB respondents estimate that a single hour of downtime can cost their firms $100,000 or more in lost revenue, end user productivity, and remedial action by IT administrators. System downtime can result in security incidents and, consequently, non-compliance. Financial data breaches due to system glitches or downtime cost $213 per capita. A 2020 study revealed that the average cost of a data breach in the financial sector averages $5.85 million. Additionally, in 2020, financial institutions were hit with $10.4 billion in global fines and penalties for non-compliance, with the U.S. taking the brunt of it with $7.5 billion in fines.
4. Customer Experience
In a revealing Salesforce survey, 70% of consumers say connected processes are very important to winning their business. Furthermore, 66% of customers want instant, on-demand engagement, and 45% will switch brands if a company does not actively anticipate their needs. A brand’s commitment to the customer’s success or satisfaction strengthens their loyalty to the brand in 61% of customers. The companies that do successfully provide an excellent customer experience strengthen the loyalty of 64% of customers, reports Salesforce. Banks and financial institutions striving to meet their clients’ expectations of exceptional customer service and demands for instant gratification are modernizing their systems and digital services. In a 2019 survey, 29% of surveyed financial firms planned to use IT to improve accessibility for both employees and customers.
To improve accessibility, 23% of surveyed banks and financial institutions will modernize their legacy network systems. One method of modernization is software-defined wide-area network (SD-WAN), which is flexible, secure, and a gamechanger for the finance industry. FinTech Futures reports that while 50% of IT decisionmakers in the financial sector see the benefits of SD-WAN, 30% lack the implementation skills; 26% lack an understanding of the technology; and 31% fear disrupting daily business operations. In order to move forward with modernization, many small, internal IT departments in financial services outsource their IT, and 87% of IT decisionmakers in the finance industry state that expertise is the most important element in an IT vendor.
Customer satisfaction is everything, and the modern consumer expects support from anywhere at any time. Banks and financial institutions must modernize their legacy infrastructure to become more secure, compliant, and accessible to reduce costs and fines, improve the customer experience, and maintain customer loyalty. However, IT teams in the financial sector may not have the expertise or bandwidth to keep pace with changing technology. That’s where a managed service provider comes in.
For 25 years, NexusTek has offered managed IT services to banks and financial institutions across the U.S., increasing uptime, enhancing accessibility and security, and improving customer experience. With current SSAE 18 SOC II Type II certification, NexusTek is experienced in FINRA, SEC, GDPR, CMMC, and NIST compliance standards. Our trusted IT consultants have the expertise to augment the IT team at your financial firm, assisting server support, infrastructure penetration testing, network security, data backup and recovery, and system maintenance, all for a fixed monthly fee that cuts CAPEX costs.
Don’t waste billable hours trying to get your technology and IT systems to work.