FinTech Belgium - Fintech Belgium MeetUp on Platformisation Strategy - Erik Blondé - IBM - 20-06-19

Editor's Notes

1. https://www.trade.be/9-belangrijke-aspecten-over-facebooks-cryptocurrency-libra/?fbclid=IwAR3xvn8iBITx5TOO0Et2zn5tYD14XZuSGwgrBkemQGz6XS2UvZYVVj7kpVQ
2. For banks to survive – and thrive – in an era of constant change requires a redesign of banking processes and systems. Current business models and infrastructure are simply not designed for banks to respond to marketplace shifts and regulatory demands with the speed and agility required to stay relevant, competitive and compliant. Managing disruption requires a new way of thinking. Meeting the forces of cybercrime, empowerment and ecosystem requires a commensurate set of initiatives centered on trust, service and economics. Together, these initiatives suggest a shift of banking business models from discrete offerings to the digital orchestration of a secure, experience-based ecosystem of financial products. Achieving this shift demands that customer experiences that had been previously delivered by people and physical locations and were supported by technology will be delivered by technology in their entirety. IT infrastructure underpins this transformation; banking strategy and technology have become inseparable, and architectural decisions are now critical business decisions. How, then, must IT evolve to fill this new role? “A platform is a plug-and-play business model that allows multiple participants (producers and consumers) to connect to it, interact with each other and create and exchange value.” There are three important components of this definition: Business model. First and foremost, a platform is a type of business model. Plug-and-play. A platform must enable participants to easily engage—and disengage (which partnerships typically don't). Create and exchange value. One plus one has to equal more than two, or there's no need for the platform.
3. Today, most incumbent banking systems are hosted on dedicated infrastructure and architected for transactional throughput. But a bank architected for disruption also requires infrastructure that provides low entry cost and high elasticity. Plug and Play of Platforms!!!   From an IT perspective, the next-generation banking architecture will be realized in a variety of ways: on infrastructure owned and managed by the bank; hosted by a cloud provider; delivered via partners; consumed from public channels; all seamlessly integrated into a dynamic, hybrid architecture.   Core infrastructure delivers the safety, security, and robustness that have helped build the bank’s reputation. Built for availability, stability and security, these systems are the heart of the bank – every deposit, payment, loan and trade relies on this core infrastructure. Core platforms are, overwhelmingly, IBM LinuxONE computers. Ninety-two of the world’s top 100 banks rely on IBM to host core systems because of their unmatched ability to efficiently process huge volumes of transactions; for example, more than $7.7 trillion USD in credit card payments annually1, and 29 billion yearly ATM transactions ($1.7 trillion USD)2. The newest generation LinuxONE the Emperor II, processes 12.6 billion transactions per day, against fully encrypted data.3 IBM is the proven leader for core banking operations.   Constant improvement in our architecture has transformed it into modern, versatile 21st century tools for sustaining banking innovation. IBM LinuxONE – already trusted as the major repository for managing capital – now deliver a modern architecture capable of being a major factor in building hybrid cloud-based ecosystems.   The technology to fuse infrastructure tuned for transactions with infrastructure tuned for disruption is available now. Combining dedicated, on-premises LinuxONE infrastructure with public and private cloud in a seamlessly integrated offering maintains the core banking promise while fully supporting the new banking business model.   Script references IBM internal analysis based on a correlation of market share volume data from The Nilson Report with IBM data on known mainframe clients IBM internal analysis based on a correlation of ATM machine statistic data from ATMIA, National ATM Council with IBM data on known mainframe clients IBM internal measurements
4. The world is in the midst of a transformation. It's having a profound effect on us as individuals, in business, and society at large. As businesses adapt to the accelerating pace of digital transformation, 3 fundamental principles have become clear: Trust is the foundation of digital relationships. Consumer, client, and partner expectations have grown. They demand security, transparency, and greater value in every interaction and transaction as this new currency is exchanged. Cyber threats continue to come from outside – but the new concern of the entire executive boardroom is the exposure of internal threats. Data is the new source of business value and differentiation. The ability to rapidly derive actionable insights will enable progressively smarter business decisions and improve customer experiences leading to new revenue streams. Data protection is paramount for trust across the ecosystem. Digital experiences are delivered through the cloud. Businesses must be open and connected to drive innovation at speed. They must accelerate development and delivery of secure and scalable services with new economic models. To support this digital transformation, you need an infrastructure that is designed to deliver trusted digital experiences. TRUST : The world is in the midst of a digital transformation, creating extraordinary opportunities to advance business and society in radically new ways -- autonomous assistance, blockchain, the Internet of Things (IOT) - all delivered everywhere, all the time, through on premises and off premises infrastructures. Living in a data-driven world means there’s more risk than ever that personal information will be stolen, that bad actors will use this data to target individuals for crimes or fake news. It literally takes no effort at all to find the endless amount of stories where consumer trust has been shaken, and the ultimate impact on that business of having a data breach.   In order to embrace these innovations, people need to trust the institutions, the platforms and the systems that underpin them. Trust will become the new currency that drives this digital economy. It will be the foundation of new digital relationships and will be a key differentiator for businesses looking to innovate and drive growth.   Businesses must ensure transparency and they have to have greater value with every interaction and every transaction. They need to exploit data for new insights to really understand their customers better than anyone else and to provide them with experiences that foster loyalty. Trust comes in many forms. You will want to understand and trust the data you used to make your decisions and train your algorithms. Those algorithms need to be trusted (be explainable, show lineage). If you can’t trust the data feeding the algorithm, then you can’t trust the output of the algorithm. You want to have trust in your infrastructure that is is highly available, fault tolerant, and resilient. Underlying all the various branches of trust (and perhaps the most important kind of trust) is trust that the data is secure and protected. At the end of the day, trust is what clients are putting into a vendor when they allow them to collect information, save credit card information to make purchases easier, or store profile information that can be revealing (such as on a health site), and more. Trust is such a big part of today’s business landscape, the European Union (EU) introduced the General Data Protection Regulation (GDPR) which needs no explanation in this presentation. DATA : Undoubtedly, we’ve all seen a chart like this before – telling us about all the volumes of data being collected and how technology shifts like the Internet of Things (IOT), mobile, and more are set to exacerbate the very problem this slide will convey when it has finished the animations. <CLICK> The problem with organizations today is not data collection – it’s that we are guilty of not knowing what we could already know. Truth be told, we aren’t as good as we could be, or should be, at understanding our data. The availability of data is not an issue for decisioning. It comes in fast (which is why the “Available Data” line animation is fast) and its curve is steeply sloped. Notice that the proportion of this fast incoming data that we can understand is much less (the curve has a flatter slope) as is the speed at which we can understand it (which is why it the “Understood Data” line animates slowly in the slide). <CLICK> Start building tension by showcasing what this gap is: Enterprise Amnesia, which is the gap between Available Data and Understood Data. I like to call this gap Value of Opportunity. Organizations are forgetting what they know (or could know). Consider all of the events any company already knows – or could know. Do they apply it to a 24 x 7 decisioning environment? For example, a hydro-electric provider knows how to identify a dangerous power tower – its characteristics (perhaps a blown transformer, perhaps rusting bolts that support the infrastructure, and so on). This same provider knows what the rainfall and salinity of the water that falls around the infrastructure and its effect on maintenance is like. The question is, do they wrap that into a computer vision project that can spot these towers without manual intervention, and then simulate and predict when a tower needs maintenance BEFORE the tower needs it? If not, they are suffering from Enterprise Amnesia. But there is another product of Enterprise Amnesia I want you to think about: if you are not using the data, it’s likely the case you’re not governing it and protecting it like you could (or should) be. <CLICK> If we, as organizations, start applying Cognitive methods (we will say this includes its subsets such as: Artificial Intelligence, Machine Learning, and Deep Learning) we will create a new curve to represent our understanding of the data. It will capture the value hidden in the amnesia abyss and open up new opportunities for top line growth, better safety, better service, and so on. You will note that this new curve has humps in it … this is to suggest that this is a highly agile process where “fail fast” matters. The curve will not follow a straight path like the one that the “Available Data” curve is following. Culture matters here and there will be iterations and re-starts. Technology also matters, and external forces matter. So the point of this slide is to detail the agenda that every client is on ... monetizing their data. There is more and more of this data coming ... There are lots and lots of this data that is not is being used. This is what every client is doing today ... it’s the strategy they are following. <CLICK> We know that we are generating lots of data and we know there is a lot of that data we are not using. You can’t avoid it ... you can certainly sell to this pain point (with LinuxONE) by addressing perhaps other issues they are having. All clients are going to agree with this chart ... but let’s ask what’s happening to that data. What’s an epidemic affecting this unprecedented infusion of data into our organizations?
5. The world is in the midst of a transformation. It's having a profound effect on us as individuals, in business, and society at large. As businesses adapt to the accelerating pace of digital transformation, 3 fundamental principles have become clear: Trust is the foundation of digital relationships. Consumer, client, and partner expectations have grown. They demand security, transparency, and greater value in every interaction and transaction as this new currency is exchanged. Cyber threats continue to come from outside – but the new concern of the entire executive boardroom is the exposure of internal threats. Data is the new source of business value and differentiation. The ability to rapidly derive actionable insights will enable progressively smarter business decisions and improve customer experiences leading to new revenue streams. Data protection is paramount for trust across the ecosystem. Digital experiences are delivered through the cloud. Businesses must be open and connected to drive innovation at speed. They must accelerate development and delivery of secure and scalable services with new economic models. To support this digital transformation, you need an infrastructure that is designed to deliver trusted digital experiences. TRUST : The world is in the midst of a digital transformation, creating extraordinary opportunities to advance business and society in radically new ways -- autonomous assistance, blockchain, the Internet of Things (IOT) - all delivered everywhere, all the time, through on premises and off premises infrastructures. Living in a data-driven world means there’s more risk than ever that personal information will be stolen, that bad actors will use this data to target individuals for crimes or fake news. It literally takes no effort at all to find the endless amount of stories where consumer trust has been shaken, and the ultimate impact on that business of having a data breach.   In order to embrace these innovations, people need to trust the institutions, the platforms and the systems that underpin them. Trust will become the new currency that drives this digital economy. It will be the foundation of new digital relationships and will be a key differentiator for businesses looking to innovate and drive growth.   Businesses must ensure transparency and they have to have greater value with every interaction and every transaction. They need to exploit data for new insights to really understand their customers better than anyone else and to provide them with experiences that foster loyalty. Trust comes in many forms. You will want to understand and trust the data you used to make your decisions and train your algorithms. Those algorithms need to be trusted (be explainable, show lineage). If you can’t trust the data feeding the algorithm, then you can’t trust the output of the algorithm. You want to have trust in your infrastructure that is is highly available, fault tolerant, and resilient. Underlying all the various branches of trust (and perhaps the most important kind of trust) is trust that the data is secure and protected. At the end of the day, trust is what clients are putting into a vendor when they allow them to collect information, save credit card information to make purchases easier, or store profile information that can be revealing (such as on a health site), and more. Trust is such a big part of today’s business landscape, the European Union (EU) introduced the General Data Protection Regulation (GDPR) which needs no explanation in this presentation. DATA : Undoubtedly, we’ve all seen a chart like this before – telling us about all the volumes of data being collected and how technology shifts like the Internet of Things (IOT), mobile, and more are set to exacerbate the very problem this slide will convey when it has finished the animations. <CLICK> The problem with organizations today is not data collection – it’s that we are guilty of not knowing what we could already know. Truth be told, we aren’t as good as we could be, or should be, at understanding our data. The availability of data is not an issue for decisioning. It comes in fast (which is why the “Available Data” line animation is fast) and its curve is steeply sloped. Notice that the proportion of this fast incoming data that we can understand is much less (the curve has a flatter slope) as is the speed at which we can understand it (which is why it the “Understood Data” line animates slowly in the slide). <CLICK> Start building tension by showcasing what this gap is: Enterprise Amnesia, which is the gap between Available Data and Understood Data. I like to call this gap Value of Opportunity. Organizations are forgetting what they know (or could know). Consider all of the events any company already knows – or could know. Do they apply it to a 24 x 7 decisioning environment? For example, a hydro-electric provider knows how to identify a dangerous power tower – its characteristics (perhaps a blown transformer, perhaps rusting bolts that support the infrastructure, and so on). This same provider knows what the rainfall and salinity of the water that falls around the infrastructure and its effect on maintenance is like. The question is, do they wrap that into a computer vision project that can spot these towers without manual intervention, and then simulate and predict when a tower needs maintenance BEFORE the tower needs it? If not, they are suffering from Enterprise Amnesia. But there is another product of Enterprise Amnesia I want you to think about: if you are not using the data, it’s likely the case you’re not governing it and protecting it like you could (or should) be. <CLICK> If we, as organizations, start applying Cognitive methods (we will say this includes its subsets such as: Artificial Intelligence, Machine Learning, and Deep Learning) we will create a new curve to represent our understanding of the data. It will capture the value hidden in the amnesia abyss and open up new opportunities for top line growth, better safety, better service, and so on. You will note that this new curve has humps in it … this is to suggest that this is a highly agile process where “fail fast” matters. The curve will not follow a straight path like the one that the “Available Data” curve is following. Culture matters here and there will be iterations and re-starts. Technology also matters, and external forces matter. So the point of this slide is to detail the agenda that every client is on ... monetizing their data. There is more and more of this data coming ... There are lots and lots of this data that is not is being used. This is what every client is doing today ... it’s the strategy they are following. <CLICK> We know that we are generating lots of data and we know there is a lot of that data we are not using. You can’t avoid it ... you can certainly sell to this pain point (with LinuxONE) by addressing perhaps other issues they are having. All clients are going to agree with this chart ... but let’s ask what’s happening to that data. What’s an epidemic affecting this unprecedented infusion of data into our organizations?
6. The IBM Z platform is designed for trusted digital experiences: The IBM Z platform features pervasive encryption, enabling you to provide the ultimate protection for your core corporate data and simplifying compliance for expanding regulations. No longer do you have to be selective in what you encrypt, 100% is the new standard. With encryption of all your IBM Z data you can protect your key corporate and client data from internal and external threats with no need for application changes, no downtime, and no impact to SLAs. Running Linux on the IBM Z platform provides a cost effective solution for handling large volumes of data reliably, securely, and with the response times your customers demand. It starts with Z platform servers that IBM designed for smooth response to unpredictable next-generation data. In addition, with IBM Z you can apply machine learning to your most valuable data that originates and resides on the mainframe to create deeper actionable insights and predictive behavior. You can build insight and intelligence into everything you do with no need to move your core data off the mainframe to exploit open source machine learning tools and methodologies. You can avoid adding cost and latency, and remove the security risks of moving data around the enterprise. You can cut data preparation time in half and you can drive repeated model creation with more memory, faster training, and better accuracy. Your cloud is only as strong as the mainframe it depends on: IBM Z is in the cloud. It is the foundation of the cloud data center. It enables massive transaction scale and low cost, high volume encrypted workloads. It provides an open and connected environment enabling developers to seamlessly develop today’s business applications. They can utilize existing skills and open source platforms, leverage APIs, and integrate DevOps across the cloud and the local datacenter. Let’s take a closer look at each of these 3 pillars.
7. Lower TCO We provide 44% lower TCO than the equivalent x86 comparison Simplied Compliance We encrypt all data in hardware at no more than a 2% overhead meaning significant cost reduction in need for software licensing or need for policy management – as we just encrypt everything in hardware and remove the license and administration requirement Improved performance We deliver a 6x – 12x performance improvement over x86 with the capability to run at much high utilization delivering better cost efficiency and client experience Future proofed We offer a pay as you go pricing model and have hybrid consumption options on-premises, or in cloud Reduce time to deploy We have a predefined, and sized T-shirt options based on the number of Temenos transactions your bank need to deliver, which enables us to price and deliver the solution more quickly getting you to go live faster Enhanced reliability We deliver virtually zero downtime with 100% disaster recovery options for clients on our architecture
8. Key Idea: IBM Financial Transaction Manager (FTM) is a unified platform for monitoring and processing multiple payment and currency types. Talking Points: It offers: Simpler initial deployment and evolution IBM FTM delivers faster time to value and helps drive higher profits through rapid deployment and less costly adaptation for future industry requirements Prebuilt, modular capabilities Offers prebuilt, industry-standard capabilities with optional complementary products for Immediate Payments, SWIFT, ACH, SEPA, check processing and corporate payment services. Single, extensible platform Converge payments processing and standardize operations, while reusing existing capabilities. Provides common integration capabilities, an operational database and more. Lower operational risk Minimizes operational risks of changes to the IT environment, allows monitoring of payment processing across the enterprise and allows for risk management across multiple payment channels. Addresses AML and Dodd-Frank—and uses industry standards to aid in compliance. Improve business agility Shorten time required for application development and integration testing. Reuse relevant assets and take advantage of pre-built functionality to create new, differentiated products. Shorten time to market The real-time capable payments hub allows organizations to deploy new products faster with common monitoring and reporting across payments rails. Operates in the cloud for rapid development and gain fast access to a preinstalled instance of the Financial Transaction Manager product suite.  IBM Financial Transaction Manager (IBM FTM) integrates, orchestrates and monitors financial transactions. It delivers consistent processing across multiple payment types, enabling banks and financial institutions to converge their payment operations on to a single platform. Financial Transaction Manager can accelerate the delivery of improved financial products and services to customers. Quite simply, you use IBM FTM to process, monitor, track, and report financial payments and transactions in multiple industry standards. On LinuxONE IBM FTM delivers payments convergence built upon the industry’s most reliable, high-performance and scalable Linux platform that’s designed for real-time payments. IBM Financial Transaction Manager comes with Pre-built Capabilities … for example, it has prebuilt, industry-standard capabilities with optional complementary products for Immediate Payments, SWIFT, ACH, SEPA, check processing, and corporate payment services. Single Extensible Platform … that lets you cconverge payments processing and standardize operations, while reusing existing capabilities; it also provides common integration capabilities, an operational database, and more. Lower Operational Risk … you can monitor payment processing across the enterprise and allow for risk management across multiple payment channels. Addresses AML and Dodd-Frank—and uses industry standards to aid in compliance. Improved Business Agility … allowing you to shorten the time required for application development and integration testing. You can also reuse relevant assets and take advantage of pre-built functionality to create new and differentiated products. Shorten Time to Market … because you can operate in the cloud for rapid development and gain fast access to a pre-installed instance of the Financial Transaction Manager product suite. There are many use cases for IBM FTM, including (but not limited to…) Consolidation of disparate payment systems across the enterprise to lower complexity and costs Centralized payment processing hub to support easier integration with other existing banking systems such as core banking, liquidity, and fraud detection systems Implement real-time or near real-time payment processing Support large and growing transaction volumes without increasing complexity and operational costs Being able to implement these use cases and taking into account IBM FTM’s capabilities, a business can derive enormous business value for a deployed solution because it provides the business a modular, service oriented architecture (SOA) that helps institutions can modernize operations to match their business needs, all the while retaining existing systems where needed. Specifically, on LinuxONE, these capabilities are supported by a single reliable, high-performance, and scalable platform that is designed to support real-time payments and the ever increasing volume and unpredictable nature of payment
9. Digital Payments solution is a new right sized solution from IBM – It’s a highly secure, fast and reliable payments processing solution tailored to the needs/size of your bank or financial institution. The Digital Payments Solution is comprised of Financial Transaction Manager (FTM) payments hub and FTM Digital Payment services FTM is an architecture to integrate IBM’s strategic Analytics, Fraud Management and Blockchain solutions into a bank’s payments environment in a seamless and secure fashion. This solution is custom built and priced for each client based their current and future payment transactions. What are the benefits to deploying our solution? Able to keep up with the pace of change (regulations & immediate payments) Able to utilize new technology to gain a competitive edge Minimize the impact & risk to their current payments infrastructure Reduce costs with improved operational efficiency Reduce fraud and improve security with pervasive encryption Digital Payments is a highly secure, fast and reliable Digital Payments processing solution tailored to the needs/size of your bank