Better understanding AI and API challenges in financial services through the 2024 Application Strategy Report
In today’s fast-paced financial services sector, digital innovation has become a crucial differentiator. As technology continues to evolve, financial institutions are under constant pressure to adapt and innovate to meet rising account holder expectations and competitive demands. The 2024 State of Application Strategy: Financial Services Edition (SOAS-FS) report offers valuable insights into how these changes are reshaping the industry. This article focuses on exploring the key challenges and solutions surrounding AI and API deployment in financial services, drawing upon the most significant findings from this report, which is based on survey results from global financial services IT managers and practitioners.
AI deployment in financial services is here and growing
AI technologies are revolutionizing the way financial services operate, with the SOAS-FSI revealing over 80% of organizations now integrating AI into their systems. This widespread adoption is not surprising given AI’s potential to enhance efficiency, improve decision-making, and provide personalized experiences to account holders. However, the report highlights a critical concern: the impact of AI performance on consumer experience and how this can overshadow even the costs associated with AI implementation.
A significant trend noted in the report is the rise of AIOps, which ranks as the second most prominent focus for decision-makers in the sector. The growing reliance on telemetry for automation is propelling this trend, as organizations seek to streamline operations and reduce human error. As AI technology continues to mature, those who invest in building a flexible IT infrastructure capable of rapidly supporting new technologies will be best positioned to capitalize on innovation, driving growth and improving service offerings.
API security is more important than ever in financial services
The financial services sector is increasingly reliant on APIs to facilitate seamless transactions and data exchanges. This had led to the proliferation of APIs and is primarily driven by the need to provide account holders with digital financial services wherever they are, underscoring the importance of robust API security strategies. The new vulnerabilities associated with API sprawl can be mitigated by more advanced API security protocols, which better safeguard sensitive data and maintain consumer trust.
As a result, API security has become a top priority, with nearly every organization deploying or upgrading its API security measures. On average, financial services manage approximately 601 APIs according to the SOAS-FS, a figure that is steadily growing as app modernization efforts expand and AI deployments accelerate. Of course, this API number is in the thousands for enterprise financial services organizations, which adds even more complexity.
The report also reveals that 45% of financial organizations are adopting API discovery capabilities, crucial for maintaining control over their digital ecosystems where zombie APIs and/or shadow APIs often remain hidden and exposed in many institutions. As a side, finding API security solutions that both discover and automatically protect these APIs is highly recommended to minimize the amount of time these vulnerabilities exist unprotected — a factor that is especially important in the open finance era.
Hybrid multicloud deployments taking center stage in 2024
The adoption of hybrid multicloud environments is transforming how financial services operate, offering greater flexibility and resilience. These environments allow organizations to choose the best cloud platforms for specific tasks, optimizing performance and cost-efficiency. Despite these benefits, the report identifies significant challenges, with 95% of financial services organizations struggling with issues related to multicloud deployments.
Security concerns and management complexities top the list of challenges, requiring institutions to implement comprehensive strategies to maintain a secure and efficient multicloud infrastructure. Flexibility is a key consideration, as 66% of respondents emphasize the importance of selecting cost-effective solutions that meet their requirements. Interestingly, while business continuity is a priority for global respondents, financial services decision-makers are particularly drawn to the AI workload advantages offered by multicloud configurations.
The growth of hybrid multicloud environments highlights the need for expertise in managing diverse cloud platforms while maintaining high security standards. Financial institutions must invest in training and resources to navigate this complex landscape effectively, ensuring that they can leverage the full potential of multicloud technologies, while mitigating the associated cybersecurity risks.
Paving the path forward
The insights from the F5 2024 State of Application Strategy: Financial Services Edition report underline the critical role of digital innovation in shaping the future of financial services. As AI and API technologies become more integrated into the industry’s fabric, organizations must develop agile strategies to address the challenges they present. By focusing on building flexible IT infrastructures, prioritizing API security, and embracing the benefits of hybrid multicloud environments, financial services can enhance their offerings and maintain a competitive edge.
Financial services organization professionals are encouraged to delve deeper into the findings of the report, leveraging its insights to navigate the complexities of AI, API, and multicloud deployments, and ultimately transform their operations to meet the demands of the future.
Download the State of Application Strategy: Financial Services Edition report now.
