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The State of DevOps in Financial Services

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The State of DevOps in Financial Services

Research says DevOps in the cloud is on the rise in financial services. Let's look at some of the barriers for businesses pursuing DevOps.

· DevOps Zone ·
Free Resource

The history of finance is a history of innovation: from the invention of debt in ancient Sumer in 3500 BC and the emergence of coinage in 600 BC, through to the emergence of organised systems of investment (stocks and shares) in the 17th century, to the latest high-latency trading platforms that make thousands of trades every second.

The advent of the cloud (and the operating model needed to use it effectively – DevOps) represents a similar innovation that enables geometric leaps in terms of the quality and speed of digital delivery.

Contino's latest research report – The State of DevOps in Financial Services –explores how far along the path to DevOps maturity organizations in the financial sector are.

We are at a tipping point. Almost every large company in the world is starting to dip their toes into these new ways of working. But, as we’ll see, DevOps maturity is still not what it could or should be.

The report analyses the responses of 165 professionals, ranging from engineers to CTOs working at a range of financial services organizations from FinTech startups and investment funds to insurance firms and the biggest global banks. In this article, I will explore some of the key findings and what that means for financial services. (You can read the full report yourself here: www.contino.io/devops-in-fsi).

Competition Is Creating Pressure for Transformation

According to our research, 64% of respondents think that innovation is “very” or “extremely” important to their business model. In this context, 58% of companies think that competition from born-in-the-cloud startups is “very much” or “completely” a driver for digital transformation.

The pressure from the likes of Monzo is forcing incumbents to up their digital game. Interestingly, “driving new revenues” and “reducing costs” were the least-cited drivers for transformation in our research. It seems that transformation is not a short-term financial matter. It’s about something bigger than that: transforming the business model of the organization to focus on innovation and customer expectations to ensure long-term survivability. It’s a paradigm shift, not a short-term win.

DevOps and Cloud Maturity Is Middling

Most organizations (58%) rate their DevOps maturity two or three out of five. 13% rate themselves a lowly one, with 30% stating four or five. Most organizations, then, report fairly middling DevOps capability, with a few companies ahead of the curve and a few lagging behind.

What separates those with greater DevOps maturity (the ‘DevOps Ninjas’) from those with low maturity (the ‘DevOps Laggards’) is interesting. The Ninjas are mostly driven by a desire to meet their customers’ expectations and to bring innovations to market. The Laggards, by contrast, are more driven to reduce costs. Their lowest priority is increasing the rate of innovation!

And maturity matters. Twice as high a percentage of DevOps Ninjas (40%) can release new software in three months or less than DevOps Laggards (21%), most of whom need 6-12 months to bring a new product to market.

When it comes to the cloud, results are also mixed. Practically everyone (98%) is using the cloud in some capacity. A slight majority of workloads are on-premises (42%), followed by public cloud (33%), then private cloud (25%). While it is to be expected that on-premises would form the majority of responses, it is encouraging to see public cloud a close second.

DevOps Ninjas place the majority (65%) of workloads in the private or public cloud, while DevOps Laggards put the majority (61%) on-premises. The Laggards cite “provisioning infrastructure” as the biggest barrier to deploying software at speed and scale (71%).

Clearly, the public cloud is an important pillar of a mature DevOps practice, massively reducing the problem of infrastructure as a barrier to rapid software deployment.

Major Barriers to Digital Innovation in Financial Services

But what’s holding organizations back from accelerating their digital innovation capability? A few major barriers come up again and again.

What is the number one barrier to fully carrying out their digital transformation vision?

50% of respondents cited “too many competing priorities”. This confirms the classic contradiction of digital transformation: trying to keep the lights on while carving out space for transforming how you work.

Intriguingly, a lack of investment was the least-cited barrier overall. This chimes with the aforementioned revelation that “reducing costs” is not a major driver.

Digital transformation - while obviously ultimately deeply relevant to the bottom line - is about something more fundamental than next quarter’s P&L figures.

What about barriers to moving to the cloud?

The number one barrier to cloud migration is a lack of leadership and management support (47% cited this as the number one barrier). This worryingly suggests that traditional mindsets are still in operation at the higher levels of financial services organizations.

This is significant. Progress cannot be made without buy-in from the leadership team. Adoption of the cloud is correlated with high release rates and high DevOps maturity. Financial services leaders need to be more open to technological shifts if they are to successfully execute their digital innovation strategies.

The skills gap is real in financial services.

When it comes to attracting the rights skills, again, very few find it easy. A majority (54%!) find it “very” or “extremely” difficult to attract the right talent. Only 16% are able to attract the right talent easily.

Accordingly, we see a big reliance on internal upskilling emerging when it comes to how companies will source the skills to carry out their own innovation strategy. 53% of respondents report that their strategy will “significantly” depend on upskilling existing staff.

However, regardless of their in-house upskilling efforts, outsourcing is still set to increase with 39% looking to outsource more over the next year. This compares to 14% outsourcing less and 30% outsourcing about the same amount.

In the face of the skills shortage organizations are attacking the problem from both ends to acquire the skills they need, be it by purchasing contractors or training on-site teams.

Does Big Eat Small or Fast Eat Slow?

Is there a difference between enterprises (over ten thousand employees) and SMEs (under 500)?

Our research has found that across the board, enterprises find innovation less important, have less mature DevOps practices, release software more slowly and are more suspicious of DevOps and the cloud than SMEs. They are also less bothered about the threat that FinTechs pose. Dismissive attitudes to DevOps and innovation seem to be reflected in the lack of skills and maturity that respondents report.

SMEs on the other hand, are much more focused on innovation – 88% find it to be “very” or “extremely” important to their business model. This is reflected in superior reported maturity and skills. They also deem modern ways of working to be less risky than their enterprise peers. They are more open to transformation and motivated to become part of the rising wave of disruption. As a result, a majority of enterprises (52%) need 12-18 months to release new software, while a majority of SMEs (67%) need six months or less.

Conclusion

The business case for DevOps in the cloud is insanely compelling. It’s a huge lever that almost every large company in the world is starting to explore.

However, our research shows that this IT paradigm shift is still very much underway in financial services. DevOps maturity is middling and public cloud adoption is only just starting to gather any serious momentum. Large enterprises, in particular, are struggling compared to their smaller, nimbler peers. It’s critical that traditional enterprises start today because it takes a long time to turn around the oil tanker: to acquire the skills, modernize the architecture and change the processes!

This is just the tip of the iceberg of the information that we collected. To read the full report, visit www.contino.io/devops-in-fsi.

Contino is a leading global DevOps and cloud transformation consultancy with global clients such as Allianz, Lloyds, Barclays, Adidas and HM Government. 

Topics:
devops ,financial services ,digital transformation ,cloud ,fintech

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