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The Changing Face of Automation in the Financial Services Industry — What’s Now, What’s Next – Futurum Tech Webcast Interview Series
by Shelly Kramer | May 4, 2022

In this episode of the Futurum Tech Webcast, Interview Series, I’m joined by Frank Wu, an Automation Strategist for Red Hat’s Global Financial Services division for a conversation about all things automation as it relates to the financial services industry.

For most banking and financial organizations, the automation journey began years ago as a way of managing complex systems in a heavily regulated industry. But as the industry has changed over the last few decades, and even just in the last two years, the role of automation in the organization has changed. There is a need for automation to move from individual instances and implementations to an enterprise platform approach that offers significantly more value and function. But how exactly does that happen? Frank and I explored that in greater detail during the course of our conversation, and also covered the following:

  • A look at what’s happening specifically with automation in the Financial Services industry and why automation is playing a role there.
  • How the talent wars and the lack of skilled tech talent is impacting the Financial Services Industry and its ability to innovate, embrace digital transformation, and provide best in class customer experiences.
  • The maturity curve for Financial Service Industries as it relates to adopting automation enterprise wide and some use case examples that demonstrate some innovative ways automation is being utilized.
  • There are challenges around existing investments and legacy operating systems and homegrown tooling. We explored those challenges and ways that automation is fitting, and can fit, into those existing environments.
  • The rise of OSS and the fast pace of business today can make for confusion as it relates to tech stack additions. On the automation front specifically, we explored what Financial Service Industry leaders should think about as they evaluate automation platforms and potential vendor partners.

It was a fantastic conversation filled with lots of useful insights and information. Watch the video here:

Or stream the audio here:

Make sure to seek Frank out on LinkedIn and shoot him a note if you have any questions or would like to discuss automation for FSIs — he’d love to hear from you.

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Disclaimer: The Futurum Tech Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.

Transcript:

Shelly Kramer: Hello and welcome to this episode of the Futurum Tech Webcast. I’m your host, Shelly Kramer. I’m a Principal Analyst here at Futurum Research. And we are going to talk today about the changing face of automation in the financial services industry. And my guest today, I’m so excited about, is Frank Wu, who’s an Automation Strategist for Red Hat’s Global Financial Services Division. Hey, Frank. It’s great to have you.

Frank Wu: It’s great to be here.

Shelly Kramer: Absolutely. So before we get started, I will talk just a little bit about… We’re going to be talking all things automation as it relates to the financial services industry. And we were talking a little bit before we started, before we got into this recording, is that for most banking and financial services organizations, automation didn’t just start happening in the last couple of weeks or year or two. The automation journey for them, in many instances, began a number of years ago, and it was a way of managing complex systems in a heavily regulated industry. And of course, then what’s been happening is the industry has been changing over the past few years and over the past few decades. And the role of automation within those organizations has, of course, changed as well.

So why automation? We need automation to move from individual instances and implementations to an enterprise platform approach. This offers significantly more value and more functionality. But what we’re going to talk about today is how does that happen? Because that’s not necessarily a big fat, easy button either. So there are a lot of things that are involved here. Frank and I are going to be exploring that in greater detail.

And Frank, I’ve already said hi and welcomed you to the show. What I would love for you to kick us off here with is tell us a little bit about, not only your role, what I’m always interested in is what’s your backstory? Tell us a little bit about your career path from where you were a number of years ago to where you are now. And then tell us a little bit about what you do at Red Hat.

Frank Wu: Yeah, no, thanks. It’s great to be here again as mentioned. I’ve been in IT for the last 15, 18 years. I’ve worked at some very large technology companies, think about the big UNIX Solaris servers back in the days, as well as the smaller open source startup companies. And for me, I think I’ve always been a technology guy, but it’s not just about the coolness of the technology, right? It’s really about the use case and the implementation. And being at Red Hat now for the last five years, Red Hat is a great company because we have a product portfolio that spans a lot of things where we can really deliver solutions for customers, right?

And it’s just the right niche where, especially for some of these older companies where they’re trying to move to the new cloud native world, but they still have a lot of Legacy old tooling in applications. And it’s always a balancing act for how do you address what’s there while also building bridges for the environment, so. A lot of my job involves talking about the people in the process, as well as the technology of some of the changes that’s happening now, culturally now at a lot of these large global financial institutions.

Shelly Kramer: Right. And, I was just having this conversation earlier today. When it comes to digital transformation journeys in particular, one important thing that I think is I find myself reminding people all the time is that digital transformation, you don’t just go, “Oh, okay, let’s do this,” and then, “Oh, we’re done.” I mean, we live in a time where technology is changing at an incredibly rapid pace that is not going to slow down that is going to speed up. And digital transformation journeys are not finite journeys.

It’s an evolution of business organizational evolution that we can expect to go on probably infinitely as technology changes, and needs change, and customer expectations continue to change. So I think that’s an important part of this equation too. But automation plays such an important role because as things speed up, as customer expectations, we were just talking about this earlier.

When you want a car to take you from one place to another we don’t want to wait 10 minutes for an Uber. We want it to be here in two minutes, one if possible, right? So we live in a world where customers want what they want when they want it. And I think that automation helps deliver on that front in so many ways, especially in the financial services industry. So, I know that you know this automation has been around for as long as computers have been around. We’ve been using it in ways in fact that most of us haven’t spent any time thinking about, right? So what’s different with automation today as it relates to the financial services industry?

Frank Wu: No, it’s a great question. And I remember seeing a study once, right? Part of it is changing the expectations on the business user side, if you think about the idea of real-time payments. Once the financial is pivoted to mobile applications and web applications, I think there was a study. People used to check their bank accounts five times a week on their laptops. On their phone, they would check it literally 30 times a week on their telephone, right? So.

Shelly Kramer: Oh, absolutely. I do.

Frank Wu: It’s yeah, it’s easy, but automation, like you said, has been around for a while. So what makes this moment different in time is really the growth of open source communities, right? Because in the past, a lot of the financial institutions would always create automation in their Silo, but because everything is interconnected, there’s a lot of different technologies that are involved in a banking system, right? These are networking technologies, database technologies, storage technologies from all the big technology vendors that you think of.

And now with the growth of open source technology, you have this idea of a vendor neutral framework where everybody can contribute code, rather than having one company create their little automation widget for just their automation product. Now you have many companies, including some of the world’s largest companies contributing to that code, but also just a change of culture towards this idea of collaboration. And it’s not just about working with Silo, but it’s about collaborating, and resharing, and reusing information across the team and company.

Shelly Kramer: Absolutely, and that’s just so important, especially as, and I don’t want to beat a dead horse to death, but we are at a period of great change and that’s not going to change. So these things I think are really important. Another thing that I think plays a really big role here, and that comes up in almost every conversation I have with our clients, is that we are at a spot where the competition for tech talent has never been greater, and even the world’s largest companies are competing, right?

So every company, whatever, regardless of size, is competing for this talent pool and I think that’s really where automation comes in. Today, every company is a tech company in some way or another, and then so we’ve got that need on the part of companies, and then we’ve got a talent shortage pipeline issue. And so let’s talk about how these things are impacting the industry as the clients that you work with are looking to advance the technologies that they use.

Frank Wu: Oh, it’s a very real issue, right? And if you think about some of these organizations who may have 50,000 software developers, a lot of these are essentially software companies, whereas in the past, some of the brightest software engineers would go work at these financial institutions. Now they’re competing with Google, and Apple, and Amazon. And it becomes a question of, “Hey, my top 20% engineers will always be rock stars,” right? But how do I make my bottom 80% engineers more operation efficient? How do I optimize and level up, right?

And that’s where it becomes this idea of collaboration and resharing information as opposed to just individual rock stars. But it is a very big issue. And it goes back to the topic of what type of tools you use, because a lot of this new generation has certain expectations around the more modernized developer tooling compared to some of the Legacy tools.

Shelly Kramer: Absolutely. And I think that plays a really big role here because, okay, so we have a tech talent issue, we also have, and I want to say a generation of people in the workplace, but I feel like this spans age groups. I don’t think this is just really the millennial generation or Gen Z, who now moving into the workplace. I think it’s people are placing more personal value on the value they bring to the organizations with whom they work.

And I’ll never forget. One of my daughters, probably 20 years ago moved to Chicago. It was a couple years after she graduated from college. She moved to Chicago. She took a job with a very big global PR agency and I’ll never forget that on her first day on the job, she sent me a photo of her computer and it was this desktop dinosaur.

And she was like, “Mom, what? This is funny, but it’s also scary. What have I got in my myself into?” And we were joking about that. And then later on, we were talking, and I do have to stop step back and say, I’m not a helicopter parent. This is not a kid who expected me to solve her problems. But it was so funny that, she knows that I’m a tech nerd. And so she’s like, “Oh my gosh, I can’t believe this.” But the other thing was that she, because one of my questions was, “Oh, so that’s your desktop? Do you have a laptop? That’s a little bit more contemporary.” And she said, “No, not everybody gets a laptop. I have to wait until I’ve been with the company X long and I have this position or whatever.”

And it’s just like, “Are you kidding me?” That wouldn’t fly today? I mean I think that people are… And we take care of our rockstar developers in one way, but that’s a small part of our talent pool, right? So I think that when we can give employees an exciting workplace and tools to use to do their work that they think are cool and industry changing.

And I mean, the reality of it is people are in these kinds of jobs because they love challenges, and they love to solve problems, and they love to do cool things, right? And so they bring that enthusiasm or lack thereof into everything that we do. And so I think that’s why this is so important when we’re talking about what automation can provide is that part of that is bringing a more interesting dimension to the jobs that we ask people to do. And that’s how we attract people and that’s how we get them to stay.

Frank Wu: Yeah. It’s a huge part of talent, attraction, and attention. And to me, the financial industry has some of the most interesting technology problems to solve, actually, just as interesting as at Google or Apple. So I think the industry has really transforming now where people are less about hoarding information and they’re becoming a little bit more transparent to say, “Look, these are the interesting problems we’re trying to solve,” because it is an issue when they want to track engineers and engineers want to talk about their work, like you said, so.

Shelly Kramer: Yeah, absolutely. So, financial services institutions, there’s a bit of a maturity curve here when it comes to adopting automation enterprise wide. Can you talk with us a little bit about some use case examples that are maybe more business-centric or more customer-centric so that we can think a little bit about that?

Frank Wu: Yeah, so I think when the public cloud emerge and it feels like public cloud’s been around forever now with AWS, they create the expectations of, “Hey, I want to get a virtual machine on demand,” right? And now that expectation’s like anybody should be able to give me a virtual machine, right? Now people are really looking at higher up in that stack. So they’re looking at things like application resiliency, where the entire application, when it falls over, I want to be able to recover the application and under 15 minutes.

They’re also looking at things like event-driven automation, where you’re monitoring tools might detect a change, and that triggers an automated remediation event. In that case, there’s no human involvement at all, right? A lot of this automation is being triggered by machine data. And that’s when your automation becomes really mature. You really trust the code to let it just execute.

Shelly Kramer: I had a whole conversation with somebody in the FSI space a few months ago about event-driven automation and how some FSIs are really looking at event-driven automation as a revenue generating opportunity within their organizations. And I don’t know that we’re there yet, but I think there’s some excitement around the fact that we can make this a revenue generating thing. And I think that’s cool, right? I mean, that’s the things that you hear about and you’re like, “Wait a minute, we hadn’t thought about that,” right? Maybe we need to dive deeper in and explore that a little bit, so.

Frank Wu: Definitely. The idea of just reinforcing customer feedback, and building into your products, and being agile doing it right away is definitely key, so.

Shelly Kramer: Yeah, absolutely. I will tell you this, I have turned off my notifications 27 times and every now and then they still pop up and I apologize for that. I don’t know what the deal is.

Frank Wu: You’re popular.

Shelly Kramer: I guess, but you know what? When you turn all your stuff off, and then you still keep getting notifications, it is a little irritating. But you know what? I know that everybody listening to this or watching this conversation has been there and knows exactly what it is that I’m dealing with. So I know that you’ve got me. So FSIs are notorious, in some instances, for having a lot of existing investments and homegrown tooling. And, so how does automation fit into these environments?

Frank Wu: Yeah, it’s a great question, right? Because a lot of times you’re going to an existing environment with a lot of just tooling, a lot of people, a lot of process, you really can’t just do a rip and replace. So the idea of a automation platform, isn’t really just about automation, it’s about the collaboration, or the glue between disparate technologies.

So a lot of times you might see some automation in one particular Silo, like networking, but there needs to be some coordination with another group, for example, on the networking side. And that’s where automation platform can come in where you can reuse your existing investments, but provide a little bit of glue to stitch together the automation end to end. And that’s really what provides that orchestration across the technology stop, right?

Shelly Kramer: Right. Yeah, that makes perfect sense. And I will say though, there was a little bit of a knock at financial services institutions who have some old school infrastructure investments, that sort of thing. Totally understandable. By the way, every organization and every vertical has that to a certain extent, right? But I will say that, and I think you and I talked about this a little bit before we started the show, is that financial services institutions have actually been on the front edge, incorporating some really interesting automation technology and that sort of thing into business operations. And you made the mention of there are some financial services institutions that have 50,000 developers on staff, right? So this is not something that they just started thinking about yesterday. This is something that has been on their radar screen for a long time.

And when you think about it from a customer standpoint, your banking, your credit cards, your payments, all of these things, they are the front lines of things that we all use from personal standpoint and a business standpoint all day, every day. So financial services institutions didn’t really have the luxury of sitting around and figuring out, “Should we do this?” You know what I’m saying? “Should we do this?” Or, I mean, you have to do it.

And I think that speaking from personal experience, I remember I got a new credit card in recent months and it was one of those, I have a credit card that I use most of the time. This one was an airline credit card that I’ve got specifically for miles, right? And I’ll give a shout out to Citi here because it was the first Citi card that I had and the process by which I was able to immediately activate that card, get the app, use it, everything. It was just…

And when you’re a tech nerd, like you and I are, all day every day immersed in this space. But when you have an experience like that, you’re going, “Oh my gosh, this was the best thing ever. Citi nailed it.” And you get excited about things like that in ways that probably other people don’t. But, that’s the thing that customers are looking for is that, “I want to check my bank balance, and I want to be able to pop in there quickly and easily, three times a day if I want to,” or fraud prevention worries, or paying your credit card bills, or all those sorts of things. I mean, they’re just really important. And as I said, FSIs haven’t really had the luxury of sitting around and being laggards on this front because customers are out there, anxious for things to work in a fast way, right?

Frank Wu: Definitely. In order to get that end to end user experience, a lot of times there may be some Legacy technologies or databases involved, right? And that guy talks about the growth and the importance of open source because open source is something that’s controlled by community of people, not a single vendor, so that technology can be really flexible and extensible and extended to some of those existing Legacy tools to give that end to end user experience. Because without that flexibility or extensibility, it’s much harder to integrate.

Shelly Kramer: Yeah, absolutely. And you also have the benefit with open source of the brains and experiences of many contributing to some of these solutions, which I think is incredibly important.

So let’s talk a little bit about OSS and with the rise of OSS and the speed at which the world is moving today, it feels like there’s so many to technologies coming at enterprises. How do FSIs choose? What do they think about when it comes to an automation platform? And what do they think about, what do they need to be thinking about when it comes to the question of who do I partner with on this? I’d love to know your thoughts on that.

Frank Wu: No. Well, so I work at Red Hat, so obviously I’m partial to the Ansible Automation Platform, which we know is the best, but looking at it independently, you think about the criteria you should be looking at is, you really want to look at the ecosystem and the health of the ISV ecosystem, right? How many technology players are actually part of that community? How many people are actually contributing code? Is it just one commercial company or is it many? And how holistic is that platform? Is it a niche type platform only in certain domains let’s say Windows or Linux, or does it span all areas of IT, Windows, Linux, database, networking, storage, and application?

And really besides the ecosystem, you also want to look at the scalability, right? If the criticality of some of these applications is so important, how proven is this technology at scale across multiple database centers, right? And is this something that’s scalable from a people perspective as well? Do I have to hire army of people to deploy this automation? Or can I reuse some existing talent as well to truly make this scalable across the enterprise?

Shelly Kramer: Right, absolutely. And I think that we were talking about digital transformation journeys earlier. And I think that’s really a key point, Frank, is that, any transformation journey is about three things. It’s about people, it’s about processes, and it’s about technology. And technology alone is, any technology solution alone is never the answer. It really is. How do we spur adoption? Do we have the internal expertise to do what it is this technology solution does? What are the processes that we have in place? How do we need to change them, fine tune, get rid of them?

And I think part of it too, is the thing that I am always preaching about is that today I think that it is a business foundational premise, that smart strategic partnerships are the way to go. And I think that, to me, that’s one of the things that I always recommend people look for in a vendor partner is understanding that what that vendor partner brings to the table is critical, and not only the technology, but the support and what that partnership looks like and how you’re able to work together. It’s not just, hopefully, it’s not just, “Oh, I’m buying this technology solution from you. See you later,” right?

Frank Wu: Absolutely, yeah.

Shelly Kramer: And those rarely work.

Frank Wu: Yeah, no, it’s a lot of our customers today. They looked at Red Hat, not only for the technical expertise around the product, the technology, but they want to talk about Red Hat’s open organization, about our culture. We’re a very transparent company, right? We have something called memo list at Red Hat. I don’t know if you’re familiar with it.

It’s a mailing list that goes through every single employee of the company, 20,000 people I think, and even the CEO would respond. And people would debate openly on this mailing list about hand dryers versus paper towels or when the company changed from a by-weekly payroll to, bi-monthly, right? And this is hundreds of people just debating openly saying, “This process sucks. This needs to change.”

So giving that type of culture and creating a voice for the folks at the bottom is something Red Hat’s always done. And it’s something we talk about often with our customers because they’re trying to recreate that similar community of practice internally in their companies, so.

Shelly Kramer: Yeah. And I think that’s such an important thing and I feel like that’s also part of the value proposition I think that we try to bring in our client relationships as well. Our clients become our friends over time. We’re not there just to work on this one project or whatever. And it really is that when you’re focused on the culture of your organization being an important part of the value proposition overall that you bring, I think that’s really, and I think it’s evident. You know what I’m saying? I think it shows, and I think that’s really cool.

And the other thing I think that sometimes people don’t think about when they’re thinking about strategic vendor partnerships is that when you work with somebody whose team has been solving problems for some of the biggest, insert word here, in this case, it’s the biggest financial services institutions, the world over, right?

So what your team has learned as a result of the work that you’ve done, the problems that you’ve solved, the challenges that you’ve encountered along the way, you bring all of that knowledge into every customer relationship. And I think that to me that is such an important part of the whole equation because we’re not trying to, we don’t have to reinvent the wheel.

And today I think we don’t have time to do that. So I think that’s to me is an important part of what vendors in particular bring and what you and the team at Red Hat and Ansible will bring as well.

Frank Wu: Absolutely. I mean, customers don’t want to talk to Red Hat, they talk to us enough times. A lot of times what we do is we try to connect them to their peers within the industry or host user round table is where we can all share, learn best practices from each other. They may not all compete on one front, but everyone has some commonality and it’s about resharing and leveling up everybody, so.

Shelly Kramer: Yeah, no, I think that’s awesome. Well, I think that wraps up our conversation today, Frank. It has been such, well I knew this would be, I mean, again, these are topics that are near and dear to both of our hearts, right? So I knew it would be a great conversation, but I so appreciate you making time to hang out with me today and for our listening audience and our viewing audience, I will be sure and put a link in the show notes to Frank Wu’s LinkedIn profile. And I encourage you if you want to talk with Frank or wants more information from him or his team to reach out. And I’ll also add some other links into our show notes as well, but thank you for being with us today as well. And Frank, I hope to see you again here.

Frank Wu: Great. Thank you so much.

Shelly Kramer: All right, we’ll talk again soon.

Frank Wu: Take care.

About the Author

Shelly Kramer is a Principal Analyst and Founding Partner at Futurum Research. A serial entrepreneur with a technology centric focus, she has worked alongside some of the world’s largest brands to embrace disruption and spur innovation, understand and address the realities of the connected customer, and help navigate the process of digital transformation. She brings 20 years' experience as a brand strategist to her work at Futurum, and has deep experience helping global companies with marketing challenges, GTM strategies, messaging develoment, and driving strategy and digital transformation for B2B brands across multiple verticals. Shelly's coverage areas include Collaboration/CX/SaaS, platforms, ESG, and Cybersecurity, as well as topics and trends related to the Future of Work, the transformation of the workplace and how people and technology are driving that transformation. A transplanted New Yorker, she has learned to love life in the Midwest, and has firsthand experience that some of the most innovative minds and most successful companies in the world also happen to live in “flyover country.”