How the cloud is impacting banking
Cloud solutions can offer a multitude of benefits – ranging from cost reduction to scalability – to businesses operating across a wide range of industries. Their effect on the finance sector could be especially profound
Traditionally, banks have been reliant on legacy systems and are often reluctant to make changes to their technology infrastructure. However, an increasing number are now considering a move to the cloud as misconceptions about perceived security concerns are dispelled.
Although daunting, this move promises banks substantial benefits and will help them overcome the challenges they’ve faced with legacy systems in the past. In a recent survey, fintech firm Fraedom found that 46 percent of bankers see these trials as the biggest barrier to the growth of commercial banks.
As banks embark on this journey, we take a closer look at the cloud migration process, some of the benefits banks can expect to see, and how firms can make this transition as seamless as possible.
Banks needn’t see adoption of the cloud as an all-or-nothing venture – it is possible to migrate in stages and manage adoption as a transformational journey
Moving to the cloud
Before migrating to the cloud, banks must ask themselves several questions: do they see migration as a project or a journey? Do they have buy-in from the entire organisation? Do they have systems in need of an upgrade that would particularly benefit from migration?
They must also question whether there are additional benefits to migrating their workload, and whether they have the right resources in place for this transition. Understanding the value of moving to the cloud and what they hope to achieve in doing so is essential.
Fortunately, banks needn’t see adoption of the cloud as an all-or-nothing venture. Instead, it is possible – even encouraged – to migrate in stages and manage adoption as a transformational journey, rather than a one-off project that will take a considerable amount of adjustment. Crucially, banks must acknowledge that doing a ‘lift and shift’ will offer limited benefits to their organisation and customers, as their workloads won’t be cloud-ready, optimised or scalable.
Banks should see the move to the cloud as a gradual transition and start by selecting the most pressing workloads and services to transfer in a controlled manner. This approach will ensure workloads are moved across securely, nothing is lost in the process and customers aren’t impacted by significant periods of downtime. This will result in a hybrid technology infrastructure – at least in the short term – which research by IBM found that 87 percent of outperforming banks are using to reduce operational costs.
Reasons to migrate
Banks’ reliance on legacy systems can make moving to the cloud, even as part of a gradual transition, seem intimidating. Seeking assistance from third-party fintech firms equipped with the knowledge and experience to carry out cloud migrations efficiently can help ensure the process is smooth and secure.
The cloud means banks no longer need onsite infrastructure management, allowing them to focus resources on value-added functions more closely aligned with their core business objectives
One of the most significant benefits of the cloud is its potential to help banks reduce core costs – particularly those associated with delivering new solutions, as well as overall operating charges. This is partly due to the fact that it removes the cost of the upgrade cycle that comes with physical infrastructure. It also means banks no longer need onsite infrastructure management, allowing them to focus resources on value-added functions more closely aligned with their core business objectives. In the long term, cloud adoption can help banks enhance customer satisfaction and bring products to market faster, therefore allowing them to maximise their return on investment.
A further benefit of cloud adoption is increased scalability. Currently, organisations not utilising cloud services must invest in additional hardware in order to scale up. This means spending more time and money. Adopting cloud solutions allows banks to scale up or down on demand, with cloud services able to expand and contract as needed almost immediately. This provides a far better way to manage costs in line with user and business demands.
Vitally for traditional banks, the increased agility and innovation that the cloud offers has the potential to generate significant and continued return on investment. According to Accenture: “Cloud adoption is integral to enabling banks to quickly add new online services, develop applications and improve [the] customer experience.” The ability to build new products and features faster and get them to market quicker will enable traditional banks to offer customers the innovative technology more commonly associated with challengers.
It is important that banks utilise technology driven by consumer demand and their own specific requirements. Moving to the cloud will enable them to build and test new products and bring them to market quickly. It will also allow developers to adopt a fail-fast approach to creating new applications and testing new features.