I think we can all agree that 2023 has been an interesting year for the financial services industry. The evolving global macroeconomic landscape of rising interest rates, inflation and volatility from geopolitical tensions has exposed the vulnerabilities and interdependencies of the world economy. These challenging circumstances, coupled with the recent collapse of major financial institutions in other countries have created shocks and aftershocks across global financial systems, to which our Canadian institutions are not immune. These events, and many others continue to underscore the importance of one major task here at home – risk management. 

There is a lot at stake when it comes to managing risk. The repercussions of negative incidents can impact brand reputation, trust, and the bottom line. Risk management plays an essential role in safeguarding financial institutions from the broader market impacts discussed above. It also allows firms to identify, assess and understand suspicious activity like fraud, money laundering, human trafficking, and other forms of financial crime – it’s very serious business.  

At Microsoft, we believe there has never been a more important time to discuss the risk challenges facing our financial institutions. In the face of these risks, many are also dealing with operational challenges including legacy systems, overwhelming amounts of data, complex analytics and increasingly high regulatory expectations. Paired with business expectations to reduce spend on IT while managing increased workloads, these factors create a challenging environment to navigate.  

So how do risk teams address these challenges to best manage potential threats while still maintaining a competitive edge?  

At Microsoft, we work in lockstep with many customers as a partner in risk management.  

We are committed to supporting our customers in managing risk across three core areas: Risk Compute, Data and Analytics and Operations and Reporting.  Each of these are underpinned by our trust and compliance capabilities, that can only be delivered by the Microsoft Cloud.​ Let’s dive in.  

Compute Capabilities are the Foundation for the Future of Risk 

On-premises technology requires a high level of internal expertise and resources to manage cybersecurity risks and does not have the ability to scale and respond quickly to market events and regulatory pressures. Cloud adoption and compute capabilities are the foundation for the future of risk management.  

The ability to run analytics across all data, with limitless capacity and speed is what our customers consistently tell us is the key ingredient to supporting risk. ​ For example, TD Securities, part of TD Bank Group, required massive compute power to run its complex derivatives pricing application, so decided to transition to Azure to address performance complexity while also keeping infrastructure costs low. 

The Microsoft cloud provides capacity on demand, helping financial organizations optimize their use and achieve significant efficiencies as well as enabling them to be more ambitious in the way they model risk and potentially respond to change.  

Taking the Guesswork out of Managing Risk with Data, AI and Analytics 

Of course, it’s not enough to only focus on boosting compute capabilities.  Financial services organizations need analytics to drive business performance, whether it be to improve capital management, reduce the cost of compliance, or quickly respond to market events. The changing nature of financial services requires analytics to surface the best information to inform on scenarios and business needs. ​ 

Azure provides high-performance unlimited cloud compute to fulfill these needs with zero trust data privacy. With cloud-based solutions, financial institutions can run new methods of advanced analytics including new capabilities with AI and machine learning that can help teams react more quickly to various risks. For example, loan loss, credit and market risk management can require highly complex calculations that would take days to compute with legacy, on premise systems. But when it comes to risk, time is very much of the essence. Delays can cause banks –and markets – real money. With Azure, banks can run models and calculations within minutes, leading to better, more-timely risk management strategies. 

Re-engineering Risk Operations and Reporting 

Finally, regulatory expectations are higher than ever and the operational workload of compliance for financial institutions is significant. However, if data is accessible by the cloud, this process can be simplified, reducing the process costs and cyber risks of moving the data around. Digitizing eliminates paper and manual entry, which reduces risk, and automating outcomes and risk processes create better visibility and reporting, allowing risk teams to focus on other priorities.  

A cloud-based financial services environment offers many benefits for organizations to manage risk and optimize financial crime prevention. The digital transformation of risk management alongside a trusted partner like Microsoft will become imperative for organizations to continually innovate and effectively manage the risks of today. 

For more information on how to impact risk management strategies with technology, check out the e-book Redefining Risk Management in an Era of Data and Disruption. 

The post How the Microsoft Cloud Helps Banks Manage Risk  appeared first on Microsoft Industry Blogs - Canada.

From changing market conditions to new and evolving technology innovations, the potential of emerging tools like OpenAI’s ChatGPT inside of our organizations and navigating the return to work, we faced a tremendous number of obstacles and opportunities. And yet, we came together as a team, and persevered. I continue to be blown away by the incredible resilience and innovative nature of our Canadian financial services customers.

While we have made a significant amount of progress, there is still much work to be done.

Financial services customers across Canada continue to face an increasingly complex operating environment with macroeconomic headwinds, stricter regulatory controls and traditional revenue sources becoming more challenging. These conditions are putting greater pressure on firms to reinvent business models and do more with less. However, legacy platforms, siloed information, limits on scale and data overload hinder their ability to deliver the best client experience, insights and tools.

While we cannot control the external forces that may impact our businesses, we can control how we respond, and organizations who stay the course on their digital transformation will be best equipped to face this uncertainty and react swiftly to challenges.

To be successful in 2023 and beyond, financial service organizations will need to focus (or continue focusing) on the following: 

Data, AI and Machine Learning – Financial services is one of the most data-intense industries in the world. Effective use of this data to enable real-time business decision making and unlock new insights is critical to stay competitive.

Last year, TD Bank announced that it established an enterprise level data estate on Microsoft Azure to power access to high-quality, governed and secure data across the bank. This initiative has enhanced the data and analytics capabilities of the bank including new opportunities with AI and machine learning.

We also recently announced a 10-year strategic partnership with London Stock Exchange Group (LSEG) that combines LSEG’s business-critical solutions and data, analytics, and modeling expertise with Microsoft’s trusted Azure cloud platform and global reach, to deliver a new range of flexible services – enhancing how investors, traders and financial institutions collaborate, analyze and transact across capital markets.  There is incredible potential when organizations harness the power of data to innovate and improve experiences for both customers and employees, and there is tremendous opportunity to reach new heights with AI and machine learning.

Healthcare of Ontario Pension Plan (HOOPP) is already working on an effective data strategy leveraging Microsoft Azure’s comprehensive data platform to inform decision making. By utilizing Azure Synapse Analytics, a limitless analytics service that brings together data integration, enterprise data warehousing, and big data analytics, the teams at HOOPP are able to access a safe and secure environment for a single source of data analytics to enable timely decisions and improve member services.

Cybersecurity – In such a heavily regulated environment where the privacy and security of client information is paramount, cybersecurity will remain a top priority in financial services. For digital banks, like Equitable Bank (EQB), this is especially important. Last year, when a cybersecurity test revealed weaknesses in its security defences, EQB took action. It replaced two security information and event management solutions with Microsoft Sentinel and deployed Microsoft 365 Defender solutions to cover endpoints, identities and cloud apps. After experiencing startlingly improved results from its second test, EQB knows it’s on the right track.

Digital Skills – Above all, organizations need digital talent to continue driving this innovation and growth. Microsoft is taking action to bridge the digital skills gap in Canada and forge new pathways towards inclusive economic growth and opportunities. Last summer, IGM Financial announced that it chose Microsoft Azure as a key provider of public cloud services to enable its digital infrastructure strategy. Through this collaboration, IGM is also leveraging Microsoft’s extensive suite of training programs and certifications to support and grow top talent at IGM. The result will be a resilient workforce capable of leveraging the Microsoft Cloud to digitize back-office operations, develop modernized practices and reinforce cybersecurity.

Most recently, First West Credit Union has partnered with HSO to use Microsoft Dynamics 365 as their new cloud-based customer relationship management platform. Dynamics 365 is Microsoft’s next-generation business application suite using the power of Microsoft Cloud for Financial Services, Microsoft 365, Microsoft Power Platform and Microsoft’s advanced intelligence tools.

Sustainability – Reversing the effects of climate change is the biggest challenge of our generation and we can only succeed if businesses and governments work together to find solutions. We also know that customers are demanding more of the businesses they work, and for many, organizations that operate sustainability and responsibly is table stakes. To enable their Environmental, Social, and Corporate Governance (ESG) priorities, financial institutions will need a modern scalable and trusted cloud platform.

Export Development Canada (BDC) is moving the vast majority of its internal datacenter capacity to the Azure cloud platform and plans to track internal metrics on its carbon impact goals using Microsoft Emissions Impact Dashboard and evaluate the results. By standardizing and unifying the organization on Azure and Microsoft 365, EDC is continuing to reduce its carbon footprint, while also improving its disaster recovery capabilities and even boosting employee productivity through its use of Microsoft Teams and other components of Microsoft 365, to build out tools and optimize its processes for collaboration.

Additionally, EDC’s implementation of Azure Databricks has the potential to help EDC track overall ESG metrics, capture insights, and support smarter, more sustainable business decisions that align with its ESG goals.

It is inspiring to see such rapid transformation across these Canadian organizations as they embrace the innovation needed to grow their business and confront today’s most pressing challenges. While uncertain times are ahead, it is this type of accelerated innovation that will ensure the agility needed for success, whatever the future may hold.

To learn more about how Microsoft is empowering the financial services industry, visit the resource below:

•    Reimagine Banking with AI e-book: Learn about the benefits of AI in banking, use cases, and how it helps or organizations like yours become more agile and make smarter decisions so you stay competitive.

The post Trends Shaping Canada’s Financial Services Industry in 2023 appeared first on Microsoft Industry Blogs - Canada.