 Live from San Francisco, it's theCUBE, covering Informatica World 2016. Brought to you by Informatica. Now, here are your hosts, John Furrier and Peter Burris. Okay, welcome back everyone. We are here live in San Francisco, California for Informatica 2016, Informatica World 2016. This is SiliconANGLE Media's theCUBE, our flagship program. We go out to the events and extract the signal from the noise. I'm John Furrier, my co-host Peter Burris, our next guest is Peter Koo, who is the head of industry consultant for Informatica, which means that you're out in the streets, talking to customers alongside sales, which is great for us, we have a great conversation, welcome to theCUBE. Well, thank you, thank you for having me. We love the front lines view because you really can get the data, so to speak, from the customers directly. You're on the front lines. What's the big pressing issue right now? Obviously, it's a holistic view. What are customers like these days? How are you guys interfacing with them? And what are their biggest challenges that you guys are solving? Well, so the area and the industry that I'm responsible for directly is financial services, so banking, capital markets, and insurance. It's our largest sector from a revenue standpoint. Obviously, the business of financial services is driven off of data. They produce the most data out there, if you think about it. So the problems that we're hearing, the challenges that our customers are facing, let's start with the banking sector. Obviously, since 2008, there were a lot of new regulations that came about, ensuring that the market doesn't go through another repeat of the crisis. The regulators are putting pressure to ensure that the companies are monitoring, observing, and measuring their risk exposures, and putting enough capital aside to cover their potential losses if things hit the fan again. And data's pretty important for that analysis, both being able to measure where the risk exposures are, being able to explain to the regulators how much capital am I putting aside, making the regulators feel happy about that. So regulations and risk management somewhat go hand in hand in the banking industry. The same also applies to the insurance industry. If you think about it with hurricane Sandy and natural disasters, insurers also need to understand where are my exposures? If I have potential properties that are being covered and things go bad, do I again have enough capital to put aside to cover those losses? But outside of regulations, you also can't forget that these are for-profit organizations. So at the end of the day, with where interest rates are historically low right now, the only way and the major way that companies are growing their business is by cross-selling and upselling products and services to existing customers. So what do we mean by that? From a digital outbound perspective, they need to ensure that they can make the offer at the right time through any device at the convenience of the prospective customer and existing customers. They also need to understand who their customers are. I don't know about you, but I have two teenage daughters that continuously receive credit card offers in the mail. I get credit card offers from my existing banks. So you kind of wonder, well, do they even know who I am? They've never offered me an opportunity to actually refinance my existing mortgage with them. I do my mortgage with another bank. You think about the wallet share that banks have with existing customers. And we'll talk about more from a consumer banking standpoint. It's roughly about two products per relationship. But when you flip it around, the average consumer has roughly about eight financial relationships with their banks, with their brokerage firms, wealth management, et cetera, and so forth. So that wallet share opportunity is huge, but the banks need to be able to identify who are their customers? What are their preferences? What have their responses been to previous offers? And what do I need to do to really understand that the next best offer is hitting them at the right time, at the right place, for the right need? Now, why is it so hard? It's because they grew up in traditional business silos. Mortgage did their own thing, credit cards is their own thing, wealth management, and so forth. But yet every bank wants to have that holistic view. And that's a data problem, but it's also an operational challenge that many firms are dealing with. So growing the business is obviously a second area of priority for the financial services industry, and that applies to the insurance industry as well. The third is innovating the business, but as well as being able to reduce the cost of doing business. And when we talk to CIOs, we ask them, well, where are you spending your money? 80% of it is spent. For our detection. To keep the lights on, right? And 20%, hopefully, to innovate the organization. The question now is, how do you adopt technology solutions to reduce the cost of doing business so that you can shift that investment model more toward innovating the business? And so when we go out there and we talk to our customer, well, what are your business priorities? We start at that level, because we want to- Is there really a business model focused like that? I mean, are they really saying, hey, we want to change our business model? Or are they still kind of going on the tactical operational fraud detection, get better retail, net contract value out of each customer? Or is it elevated up? I mean, because we hear different messages. How do you get your thoughts on that? For example, in the insurance industry, changing the business model may not necessarily happen overnight. But when you think about what they have to do to improve the customer experience, either direct to the consumer or through the channels they do business with, brokers, agents, and so forth, they're really transforming the way they do business, not necessarily the entire business model as a whole. Insurance will always be insurance, banks will always do what banks do well, which is lend money and obviously taking deposits and have a margin there to give back to the shareholders. But the way that they're reaching out, the way that they're interacting, the way that they collaborate with their customers is changing. Think about the advancements of mobile technology. Think about the advancements of IOT out there right now. We've just been looking at some of the numbers in terms of the number of end points. 25 billion out there. And what's the impact to the financial services industry? It's going to be huge. You think about all that data that's being produced, all the payment channels that are now coming to speed. For example, Samsung announced an offering where they can provide direct purchase of groceries from their smart refrigerators. So there's commerce that's being generated from these areas. So the banks have to transform the way they do business, but the business model in itself isn't necessarily changing as other industries are. You said something interesting. I want to make sure I got it before we move on. You said that on average, an individual or a bank or financial institution has two products placed with their typical customer, but that the average customer has eight relationships with financial institutions. So the average customer is somewhere in the city of 16 financial products that they use, but banks typically are only seeing 15% of that potential share of fall. Have I got that right? Well, sort of. So it's basically saying, look, how many credit cards does an average consumer have? I personally have four credit card accounts with four different banks. I have two online brokerage accounts, one with E-Trade and another organization. I have my homeowner's insurance, my auto policies, and my life insurance actually from different companies. Now, customer loyalty is obviously based nowadays on price. You give me a better rate. You give me lower fees, lower premium. I'm going to go with you. And convenience. And convenience as well. So competing on price is always been the case. What they're now doing is competing on things like convenience. How do I create that stickiness so that when a consumer not only needs to get information about the products we offer, but what if they need financial advice in terms of, okay, they just had a child? What can we do to provide college savings funds, fund offerings to that newly wedded or the new couple with the new baby, right? Now, again, how would you know that? If you look at traditional information, account openings, transaction activity, et cetera, you might derive what the patterns are of their lifestyle. But think about now what's happening. You have organizations that are bringing in, for example, social media data. They're tying in Twitter, they're tying in Facebook, they're tying in LinkedIn. They now have a broader profile of who their customers are and what their needs are. And you integrate that into the marketing process you're able to then really do one-to-one marketing. But it's not about just the right product and the right price. It's the place and the convenience. So they are definitely competing on that front. So while it's sharing, again, just kind of looking back at your own personal lives. How many accounts have you opened in the past? Do you have all your relationships with one bank? They want it, but they need to do a better job of really understanding who their customers are by leveraging and harnessing the data that's available to them today. Well, a question that comes up all the time. We love this conversation because big data has a lot of problems, certainly in your areas. Insurance, no brainer. If I drive a Tesla, they know I roll through stop signs. I'm sure that's going to increase my rates if they're capturing it, but it's a privacy issue. Financial fraud detection. Why can't they put together the fact that I travel a lot for theCUBE and I'm in Vegas because my phone is in Vegas, but yet my credit card gets shut down for fraud alert. It's just what an inconvenience. So they're not kind of there yet, but the question comes down to how can they use data? And this is the thing with insurance because we kind of brought up with healthcare. How can you innovate with data with all the regulatory BS on your shoulders? Because it's like a big rock you're carrying around. You talk about the financial compliance. That's the challenge. How do you guys address that? Because it would be perfect to me that Informatica's got the perfect solution with the mastered data. It's a great point. I mean, most of the data management spend and the reasons why the big banks, for example, is spending money on building out big data warehouses and investing in data governance and putting all the policies and standards in place because they needed to address the regulatory requirements. What we've been saying is don't treat every new regulation as yet a new project. Think about the investment that you're making. You're putting together best practices, people and roles and responsibilities and adopting technology to deal with, let's say, the big regulations. Leverage that investment to support and benefit the other sides of the business. A great case in point. There's a regulation out there called FACA, which is the Foreign Account Tax Compliance Act. Basically foreign banks that have U.S. taxpayers as customers, they have to report to the IRS that they have a customer. So you hear those commercials, hey, we have a foreign account. Make sure that you disclose that. The data and information that's used to enforce and monitor and identify U.S. taxpayers as foreign account holders, there's an 80% overlap, the same data that they would use for sales, service and marketing. But yet they invest in separate infrastructure to deal with the regulations. So our message is leverage technologies like Informatica to build a platform once and utilize what you've done and are doing with the data for risk compliance, for sales and marketing. And simplify the way that you're onboarding the data. Simplify and leverage common data quality rules to determine account number is account number. Don't just do it for FACA compliance, but also do it to help upsell and cross-sell the new credit card offers that you're promoting as well. So the concept of what we've been sharing here at the conference, the platform mentality or the platform concept really does apply as a CIO, then I'm not spending money to do this, money to do that, where I'm doing a lot of repeat work on the back end. So the mindsets are changing, the investments are changing and Informatica is definitely helping our customers drive down that journey. It doesn't happen overnight, but we see material evidence that organizations are thinking about building something once and using it everywhere. So I got to ask the follow-up questions. So we've been in every Hadoop world since it started. The Cube was started in the Cloudera office when they were like 17 employees. We've seen an appetite for finance and insurance for Hadoop, but Hadoop just hasn't made it yet. It's like, it gets to a point, yeah, batch and data lake, I get that, but where is the rubber hitting the road and where is it breaking through? Where is Hadoop now connecting with preexisting and or new innovations? Informatica obviously has a role with Hadoop, we see that, and now the cloud with AWS and the cloud, where does the commercial software innovation meet the open source? Where do you guys enable that kind of glass ceiling that Hadoop has hit? And what are customers saying about this? Are they, am I got a good read on this or? What's your take on it? You're absolutely right, I think, you know, like anything else, you know, when you have hot topics like Hadoop three, four years ago, and that's really how long I think the technology has hit its bandwagon course. Nowadays people are talking about blockchain, right? Sort of the new pivotal thing, right? Hadoop, the adoption of Hadoop that we saw out there in the industry started off more as prototyping. Hey, how do we augment our data warehousing costs by taking in all this massive amount of structured and unstructured data instead of plopping it into a very expensive enterprise data warehousing platform? We'll use Hadoop, commodity hardware, distributed architecture, process all that data and spit the results out into our data warehouse. So we're offsetting our data warehousing costs. The reality was- By the way, at that time, they didn't want to pay for the data warehousing costs because they really didn't know what they wanted to do with the Hadoop data, pile it up. Right, whether it's Hadoop, NoSQL or any one of the other technologies that fall under the big data category, you know, I've been saying it's a means to an end. So the question is, what are they really trying to solve? The questions that they've asked in the past, for example, who's committing credit card fraud? Why is it occurring? How do we prevent that from occurring? And you're a use case there, right, that you explained. Traditional relational database data warehousing technology would take in all this data, but the analytics would run against all that data and the answers would come out after 20 hours. Sometimes it takes days. I worked in the credit card industry, know that very well. We would take month-end data. We'd run our rules in the data warehousing environment and we would wait literally 32 hours to get an answer. So by the time we're all said and done- The rules engine. It's a rules engine, right? So you're running your algorithms. Now what Hadoop does, it allows you to do three things very differently compared to legacy architectures. One is, I'm bringing in all that massive amount of data. I'm running my algorithms and rules against that data. I'm getting my answers much, much quicker. So the speed, so if time equals money and I can prevent another fraudulent activity from occurring, there is a business case associated with that investment model. The other side of it, however, is that now as a statistician, I'm no longer taking a sample of the population to run my rules. I'm now analyzing the entire population. So my p-value becomes even more accurate. So combine the two. Now I'm going against the population. I'm going against not just last month's data, but I'm going against 20 years of data. I'm getting more accurate results and I'm getting it in a timely manner. I don't have to wait hours, days, weeks for the results. The transition, however, the industry needs to make is now I get the answers faster. Do I have the ability from a business standpoint to actually take action upon it? So again, it's the means to an end. The question is, are the questions that they're asking, whether it's to combat fraud, whether it's to identify what the next best offer is, are the banks and the insurance companies themselves being able to really reconstruct the questions that they're asking? Because now I have more data, I have more types of data, I'm bringing in data from sources that I never even thought of bringing in. And then you couple that with the trends around IoT. Now of all this interaction data coming through, what can I do with it? Should I be reconstructing the business question in itself? And I think that's where a lot of the traditional folks that we're used to looking at the sample of the population are now trying to ask themselves, how should I be constructing the question? Because I'm getting some interesting answers, but I don't know what to do with it. Talk about the dynamic of this enterprise class integration cloud. Obviously it's going to come out in June, so it's announced now. What's some of the traction? Obviously you're out in the field, so you're talking about pre-release customers, people on board. What is that fitted? Because integration is a real big part of the informatic strategy. And we were just at Sapphire last week and clearly integration is now the new, kind of the bar to get into the enterprise. Because it's complicated things have consequences. So as a regulation to standards, to interoperability, to frictionless data, sharing, IoT is right around the corner. So you start to see the enterprise putting the bar to get into the game higher up. And integration seems to be the top one. So what I hear from you, I hear two different topics. One is around what is really pushing the envelope around the need to better integrate systems and data. From a cloud perspective in financial services again, I think a lot of the firms are somewhat suspect who, hey, do I really want to leverage a CRM system in the cloud? We've been operating on-premise applications. We have control over the environment. Security's going to be addressed by us and we're not necessarily going to have to point fingers or something goes bad. Cloud investments, whether it's software as a service, whether it's infrastructure as a service, whether private or public, it's now becoming mainstream. In fact, I would say right now it is mainstream. Every CTO and CIO that I speak to has a cloud strategy. What's driving that is really two areas. One is obviously simplification of the IT landscape. And therefore that translates to lower your operating costs as much as possible over time. The second is increasing business agility. One of the largest banks in the world recently shared their cloud strategy and I asked them, why are you doing that in the cloud? I said, because it takes three weeks for us to even procure the PO to get the hardware. And then it takes another four weeks to get the resources to implement the hardware before we can even install the software and get the right people and the support staff. Now I can go to Amazon and get the environment set up and it's basically there on demand. Agility, time to market is important. However, the interoperability of these new investments with their software infrastructure has to work with legacy on-premise systems. Core banking systems will always remain on-premise, at least for the foreseeable future. Mortgage origination systems, policy admin systems in the insurance arena. So these systems and infrastructure applications have to work with on-premise and that is what's driving the integration message. What are financial? You can put some stuff in the cloud but don't put everything in. So the data integration is critical at that point. It's the integration, it's the governance. How do we ensure that I'm taking client data out of 16 different on-premise systems and feeding it into my new cloud CRMO marketing application is the right data to send to begin with? Who determines what is right? So the governance layer becomes very important. The other side of it obviously is going to be on the security side. If you think about what's happening in Europe with the data privacy laws with GDPR. All right? It's just yet another regulation bucket. Yet another regulation where now organizations have, basically they can't send any personal information outside the borders of their country. So what does that do for the cloud vendors? Well, they have to have data centers in each of these borders and that's how they're addressing this. So from an informatica perspective, these trends are fueling- And IOT is right around the corner too. We've got IOT on the doorstep. Right. So all these mega trends are really just, again think about it, more systems to deal with and in fact, CTOs are telling me, look I've got business folks that are subscribing to finance apps in the cloud, HR systems, commission payment systems, but they're not getting rid of all the old stuff that we have. So you start adding layers and layers of complexity and that becomes obviously a nightmare to maintain and- Peter, let's talk about the last minute. I know I love the comment about the regulation yet not yet another regulation project. Don't treat it like that. It's an iteration of setting up something, say informatica and other integrated systems. Don't throw it away, build on it. So that abstraction layer is interesting. Talk about that next conversation, which is spend a minute talking about the innovation side of it because we kind of got in the weeds, run to the hood, a lot of stuff going on, it's pretty complicated. You guys are making it simpler, but the innovation is what people want. That's the top line that's going to drive their business. What here at Informatica World is most notable to you that you guys are announcing that you can share that really drives at the heart of the innovation story? Well, earlier this morning, Ahmed Wally, our chief product officer went through sort of the evolution of the Informatica platform. I don't know if you guys had a chance to sit in on that. So we started off with providing best-of-breed technologies to build data warehouses. Then customers wanted to improve the quality of the data that was feeding into those systems. Next, they wanted to ensure that they have a trusted golden record so Master Data Manager became prevalent. And now, of course, integrating through the cloud and on-premise. The innovations that I saw that really inspired me today as I sat through the sessions is that we're now providing the metadata-driven architecture, which is what organizations really want to know is not just what data do I have and what does it mean, but where does it come from? How does it produce? How do I explain to the regulators or to my business partners that this is the data they ultimately have been asking for, it's trusted, it's certified, and what Informatica is doing with our live data map capabilities, we allow not developers to visualize the end-to-end lineage of their data, but we allow business users to now visualize and get the answers that they're seeking. One thing that you'll hear at Informatica is that we're moving a lot of our capabilities not away from IT users, which has been our traditional base, but providing capabilities that allows the business sponsors and the stakeholders to be a part of the data factory. So no longer am I saying, IT, I need this, but you can leverage things like Informatica's rev solution, which is a data prep solution. I, as a business user, can go in and shop for the data that I need. The big data management solutions that we have now allows organizations to really harness the value of Hadoop ecosystems to ensure that they have the ability to say, look, this is good data, but I now have crowdsourcing capabilities to say, Peter, do you think it's good data? On a scale of one to five, you say it's a four, you say it's a two, I say it's a one. So we're providing that collaboration capabilities. You're enabling more people to get as much data as possible into the system to get context. Absolutely. So what we're doing is the innovation is shifting from IT just being the curators and the controllers of the data to now providing business users to be a part of not just the consumption of the data, but also the administration, the governance, as well as the manufacturing of the data that they need. And that's what our prep solution provides as well. The individual products and the innovation that Informatica's investing is that if customers have grown up using Informatica for data integration and data quality and they want to consume these other things, that we are behind the scenes assuring that they work, that they interoperate on the back end. Otherwise, a bank or a healthcare organization or a retailer, they end up making the decision, do we want to be a software company or not? And that's not the business that they're in. Leave that up to companies like Informatica. I think it's got a great platform. I think that really, really enables the cloud that enables the legacy data architectures and yet brings in the SaaS and the cloud native, rapid development, IoT, et cetera. Thanks for sharing the insights, Peter. Appreciate it. Day one of two days of wall-to-wall coverage of theCUBE here live in San Francisco at Informatica World 2016. I'm John Furrier with Peter Burst. We'll be right back after this short break. Hi, this is Chris Devaney from Dataro.