A recent report from analyst research firm Aite estimates that the majority of global tier-one financial institutions have less than ten per cent of their total technology stack hosted in a public cloud environment. A startling statistic considering how large institutions such as Bank of America, which has been running cloud since 2013, has saved $2.1 billion in infrastructure costs. The financial sector has been slow to move to a cloud-based environment. Understandable concerns around data security are often cited as a key reason, but those financial institutions that do take the step towards the cloud can expect to realise a number of huge business benefits.
Cloud migration offers demonstrable business benefits for banks and financial institutions. A Chief Technology Officer at a tier-one global bank, explains this better when he says: “The transparency that the cloud offers around costs - getting that understood with folks who are responsible for finance and forecasting is an important piece.” The CTO added that cloud-enabled IT departments are able to deliver solutions in a faster timeframe. Furthermore, he states that the IT department can also work on DevSecOps models, giving them a lot more automation around their software development, data quality, software development and test quality.
Overcoming the challenges
The technology that allows systems to run in a cloud environment has been around for a long time. The bigger challenge for CTOs and CIOs is often getting the business approvals to be able to do what they want to do with cloud technology. Organisations should not underestimate the length of time it can take to implement a cloud infrastructure. Each system that's being moved into the cloud needs to be judged on its own merits; there might be legacy systems or the organisation might already have the existing infrastructure it needs and it makes sense to actually continue to use it for a period of time.
Risk and security understandably are among the biggest challenges faced by banks and financial institutions when migrating their organisation towards a cloud environment. Firms need to be assured that, in the cloud, both the institutions’ and its customers’ data are well protected. One of the main challenges financial institutions face is actually moving data to the public cloud. Security teams and regulators have strict requirements that need to be met, such as data location and encryption. These need to be understood and addressed upfront, rather than waiting for the project to be implemented.
“Ensuring that we had the right risk and security controls that are approved and agreed on from an enterprise perspective was essential,” said a CTO from a tier-one bank. “With the cloud, like any environment, it’s essential to manage the security and risk associated with that environment, which should be a foundational piece of your strategy.”
Cloud technology offers all financial institutions and banks the opportunity to have greater control over their workloads and, even with out-of-the-box cloud solutions, they can enjoy greater insights into those workloads and budgets associated with them. In a world of shrinking budgets for both people and resources, the cloud offers a lot of additional tooling at very competitive prices, whether that comes via a third-party or as part of the native toolset.
Other benefits of the cloud include stability and scalability as well as disaster recovery. In the cloud, stability means reliability. Financial firms can rest assured that in the event of a problem in one location, they have business continuity as other servers in the cloud will scale, and act as backup providing the correct deployments architectures are in place. CTOs and CIOs can also add new functionality without disruption. Financial institutions’ reputations rely on 24/7/365 reliability. With the cloud, there is no downtime, if one site is down another will pick up the slack, so the business can continue to function in the case of a disaster in one location.
The final decision
Adopting cloud technologies is a key strategic business decision and firms looking to start their cloud programs can look to engage with experts early in order to help them formulate and implement strategies. This is where managed service providers can really add value as well as help save time, money and resources over the long term. Working with external managed service providers can help to accelerate migration and so that IT departments can start to realise the benefits quickly while focusing on other business critical tasks.
So, in general, the tide is turning - senior executives are starting to champion the move to the cloud. But the reality is that it's an education exercise. There is no one single cloud infrastructure model for financial institutions - every organisation is different. The key thing is that firms adopt a cloud infrastructure that works for them and gives them scope to scale as required.
Colin Sweeney, VP Client Operations, Fenergo