The financial services industry is entering an era of unprecedented transformation. Fueled by emerging technologies like generative AI (GenAI), modernized cloud infrastructures and the pressing need for new skills, banks, insurers and financial firms are rethinking traditional approaches. 

The power of data and GenAI in financial services 

Data has always been a core asset for financial institutions, but the adoption of GenAI is revolutionizing how firms use it to drive better customer experiences, enhance decision-making and maintain regulatory compliance. 

As Sudip Lahiri, EVP and Head of Europe & UKI, Financial Services at HCLTech, explains, “Data plays a very important role in decision-making, in delivering superior service to the customer… and also having the ability to deal with the regulator and make sure organizations… run a very compliant business in all these areas.” 

GenAI is powered by a strong data foundation and financial services institutions view the technology as “an opportunity to accelerate the modernization journey,” adds Lahiri. With its capacity for deep data analysis and automation, GenAI solutions are viewed as catalysts for transforming legacy financial systems, enabling companies to modernize and address their technical debt. 

HCLTech’s solution, AI Force, plays a significant role in helping financial institutions leverage GenAI to accelerate modernization and improve efficiency. “Organizations are doing various proof of concepts, and we are extremely privileged and proud to be part of some… groundbreaking initiatives with some of our very strategic customers across [the] European region,” says Lahiri. 

Challenges in technology adoption and legacy modernization

Despite the promise of new technologies like GenAI, the financial services sector faces several unique challenges. Many financial firms, for example, have been slow to adopt cloud solutions, hampered by decades of legacy infrastructure and complex, high-stakes environments. 

As Lahiri points out, “There is a need for accelerating reduction of technical debt, modernizing the legacy applications and [accelerating] the journey to the cloud.” 

HCLTech’s expertise lies in helping clients navigate these obstacles by assessing application portfolios and developing a clear roadmap for cloud modernization. Whether companies need a “lift and shift” approach or a full re-architecting of their systems, every business is different and requires a tailored transformation plan.

An equally critical challenge is regulatory compliance. In Europe, financial institutions are navigating strict regulations, such as the Digital Operational Resilience Act (DORA) introduced by the European Central Bank. Financial services institutions need to adapt to these requirements with a strong technological foundation to ensure compliance while also enabling rapid, sustainable growth. 

Bridging the financial services skills gap 

A notable finding in HCLTech’s latest cloud research, Cloud Evolution: Mandate to Modernize, underscores a significant barrier within the financial sector: a pronounced skills gap in cloud technology. 

The report reveals that 51% of financial services respondent's experience skills gap issues, a number substantially higher than the 38% reported by other industries. 

According to Lahiri, “Financial service organizations have been a bit of a latent trend in adopting some of the newer technologies like cloud or adopting newer operating model like BizDevOps… still, they have significant amount of mainframe footprint.” 

The legacy-focused background of financial services has created a gap between the industry’s needs and its existing workforce capabilities, often relying on experienced professionals proficient in older technologies. 

HCLTech is tackling this challenge by upskilling client workforces, empowering them to adapt to cloud-first and agile environments. As an example of this in action, Lahiri provides an example of a project with a Dutch bank that aspired to be a fully digital bank, prioritizing superior customer experience and operational efficiency. 

The bank had a substantial mainframe-based infrastructure and a workforce heavily reliant on legacy systems. HCLTech partnered with the bank to implement a DevOps-driven model, introducing modern applications, reducing dependency on mainframes and creating a robust digital foundation. 

“We actually helped them to adopt BizDevOps by bringing in modern architecture… and helped them to develop newer applications in modern apps technologies,” shares Lahiri. 

Today, the bank is recognized as one of Europe’s top digital banks, known for its outstanding customer experience.

Real-world impact: Driving transformation in financial services

Lahiri points to two other case studies, as examples of financial services firm embracing transformation initiatives.

• A FinTech division

A major UK-based bank sought to launch a FinTech payments division to compete with leading players in the digital payments space. When their existing partner encountered financial difficulties and couldn’t support the Bank’s global ambition, HCLTech stepped in, stabilized the platform and led a complete build and implementation effort. 

We came in, we took over the build of the platform, helped setup customer service and operations, financial crime prevention operations and we helped them to launch the FinTech in [the] UK market,” explains Lahiri. Now, the bank is preparing to expand this FinTech division into additional European markets, further strengthening its competitive position. 

• Data center transformation

In another transformative project, HCLTech partnered with a leading bank in the Nordics, which was struggling with high operational costs and a complex legacy infrastructure in its data centers. The team transitioned the bank’s data center operations, reducing costs, enhancing resiliency and setting up a “future mode of operation” architecture to facilitate cloud adoption and modern infrastructure.

“We stabilized the operation, brought down the cost, delivered resiliency and also made sure that we move them into what we call future mode of operation,” says Lahiri.

Through these changes, the bank was able to migrate to a hybrid cloud environment and laid the groundwork for introducing GenAI-powered solutions.

HCLTech and AWS: A strategic partnership shaping the future of financial services 

HCLTech’s collaboration with AWS is pivotal in enabling financial institutions to leverage cloud and AI technologies effectively, like in some of the case studies above. 

“AWS is a very strategic partnership for HCLTech,” says Lahiri. Together, the companies are driving meaningful transformations for clients across the insurance, banking and capital markets sectors. This partnership not only enables the secure, scalable deployment of GenAI-driven solutions but also ensures that these solutions are adapted to meet industry-specific needs. 

In one project, HCLTech collaborated with AWS to deploy a cloud-based platform for regulated insurance businesses in the UK, enhancing operational agility and enabling seamless compliance. 

“We are engaged with several of our customers to help them in their journey to cloud towards AWS,” says Lahiri.

At AWS re:Invent 2024, HCLTech and AWS will share insights gathered from these success stories. The booth at the event will showcase demos, best practices and real-world examples of how cloud and AI are transforming the financial services landscape. 

“If you are an AWS customer or thinking of adopting AWS, and you want to know how GenAI can transform your business… please do visit us at the HCLTech booth at AWS re:Invent,” says Lahiri.