Why Data Fabrics Hold the Key to Collaboration and Innovation within Financial Services

Currently, 40% of fintechs globally experience difficulties connecting to their customers’ applications or systems, according to research from InterSystems. While this often stems from the prevalence of data and application silos, as well as disconnected processes and systems within their customers’ infrastructure, it could have significant and direct implications for fintechs.

In particular, this challenge is likely to make it difficult for fintechs to integrate any new applications or solutions within a financial services organisation’s technology stack and impeding their ability to collaborate with these types of institutions. With 93% of all fintechs and 100% of those in Ireland, revealing they want to collaborate with incumbent banks in some way, problems with connecting to their existing applications or systems could seriously inhibit fintechs’ ability to capitalise on these potentially lucrative relationships.

In the first half of 2021 alone, Irish fintechs secured a record-breaking $900 million in transactions and investments so to avoid missing out on future opportunities and build on the success experienced last year, they must find a way to more easily connect to any financial services organisation’s existing legacy applications, production applications, and data sources. With 46% of Irish fintechs saying that enabling better integration with customers and third parties is one of the biggest drivers behind implementing new technologies, it is clear there is an appetite to address this challenge.

One of the most effective approaches is for fintechs to develop a bidirectional data gateway between their own applications, of which 98% are at least partly cloud-based, with 17% providing a hybrid cloud and on-premises application and the remainder offering services based in public or private clouds, and their customers’ environments, through the use of smart data fabrics. With these cloud offerings making it easier to provide remote access and service updates, while also being able to be deployed on-premises, developing a bidirectional gateway will ensure that financial services institutions don’t have to miss out on innovative fintech applications.

Creating a bidirectional data gateway

Typically, integration of fintech services and applications has been accomplished via manually coding point-to-point integrations, and moving and copying data, which is cumbersome, slow, prone to errors, and difficult to maintain and extend. It also makes it difficult to feed applications with the live, real-time data they require.

By adopting a smart data fabric, a new architectural approach, fintechs can create a bidirectional, real-time data gateway between their cloud-based applications and their customers’ existing on-premises and cloud-based applications and data stores. The smart data fabric provides a complementary and nondisruptive layer that connects and accesses information from legacy systems and applications on demand.

The smart data fabric can integrate real-time event and transactional data, along with historical and other data from the large number of different back-end systems in use by financial services organisations, and transform it into a common, harmonized format to feed cloud fintech applications on demand. To this end, it provides bidirectional, real-time, consistent, and secure data sharing between fintech applications and the finical services production applications. This bidirectional connectivity also means that any changes made through the fintech applications can be securely reflected back in those production applications.

This approach will enable financial services organisations to easily leverage and provision new fintech services and applications, and to seamlessly integrate their existing production applications and data sources with these applications. This will enable fintechs to overcome difficulties with connecting to their enterprise customers’ environments and ensure they are in the best possible position to partner with banks.

A new wave of innovation

Despite legacy technology holding many institutions within the financial services sector back, there’s a continued desire to implement new solutions that will meet changing customer and regulatory expectations, and where this smart data fabric-powered approach to developing a bidirectional data gateway can help to spark a new wave of innovation, as well as increased speed and agility.

Together, these capabilities will enable financial services institutions to react to new opportunities and changes in their environment more quickly by making it faster and easier to incorporate the wide range of fintech applications and technologies available in the marketplace. It will also give them the insights to make better business decisions, improve customer experience, with the potential to offer more digital and hyper-personalised offerings, and drive their organisation forward.

This echoes the value that fintechs believe they can provide banks by working together, with half of Irish fintechs saying they think banks will benefit from increased agility and speed to market. Meanwhile, 63% believe banks will get value from these relationships as it will enable them to focus on their core areas of expertise and differentiation, and 56% expect to help banks improve customer experience and engagement.

Two birds, one data fabric

By adopting a smart data fabric approach to implementing a real-time, bidirectional data gateway, fintechs across Ireland will be able to tackle two problems they have long suffered – helping to increase both collaboration and innovation.

Firstly, adopting this new type of data architecture will allow fintechs to solve the problem of connecting their cloud-based applications to their customers’ environments, enabling their solutions to be more swiftly and easily integrated within those environments and increasing the potential for collaboration with financial services institutions.

Secondly, it will allow fintechs to assist financial services organisations in overcoming their own data struggles, helping data to instead become a critical differentiator and empowering financial services institutions to innovate faster. This increased innovation will help institutions to better meet their business goals, deliver benefits back to their customers, and create an edge in a competitive landscape.

By being able to more easily adopt fintech applications, financial services organizations will be able to unlock faster development cycles, are likely to experience fewer bugs, and can reduce their total cost of ownership. Therefore, both fintechs and financial services institutions in Ireland stand to benefit from this use of technology, setting fintechs up to sustain the momentum of last year.

Guest post by Redmond O’Leary, Sales Manager Ireland, InterSystems