The pace of digitalization in the banking and financial services industry is hastening due to the COVID-19 pandemic and modern technologies disrupting traditional business models. Moving to the cloud is now key to help drive forward digital transformation initiatives.
Financial institutions (FIs) are realizing economies of scale by running software, data analytics, and digital business processes on pre-built cloud services that provide greater computing resource and software applications availability, power, and security than hosted platforms.
At present, FIs are at widely different maturity levels with cloud adoption. CIOs and CTOs at all stages of the cloud journey should consider how to address the complexity inherent to cloud deployment—whether they have started their journey or not, industry-wide trends are pushing FIs toward cloud services in order to accelerate digital transformation initiatives.
Financial Institutions Cannot Avoid a Multi-Cloud Environment
While on-premises hosting systems and servers will be maintained for certain functions, such as trading and risk management, migration of applications to the cloud is an essential driver of business model digitalization.
Financial services applications (e.g., online banking apps) and digital business processes are increasingly built and run on, and application services (e.g., fintech partner APIs) are increasingly being consumed, on multiple cloud services like Salesforce, Amazon, Microsoft, and Google. In the future, FIs will be unable to avoid migrating to multi-cloud environments due to emerging open-banking regulations, the facilitation of connected-banking capabilities, innovation in core systems packages, and the scale economics of running digitalized financial services processes.
While hosted solutions will still be part of the technology mix, pre-built cloud services offer significant benefits to FIs modernizing their processes and digitalizing service delivery.
Benefits of Moving to the Cloud
As I write in my latest report, CIO/CTO Checklist: Managing the Architecture of Multi-Cloud Environments, “Many financial institutions can run their applications in a faster, more consistent, and more highly secure manner in the cloud.” Cloud-based applications require less resourcing to maintain and provide efficiency gains as organizations can allocate computing resources to match needs in running internal and client service processes (e.g., providing client account analytics).
IT leaders who once perceived the cloud as insecure or fit only for specialized functions now accept that cloud services constitute the modern technology infrastructure that enables digitalization of financial processes and customer experiences.
Migration of legacy technology infrastructure to cloud services poses a complex set of challenges, especially in deploying a multi-cloud environment. For example, technology architecture has to accommodate the specific delivery models of individual cloud services (i.e., IaaS, PaaS, or SaaS). CIOs and CTOs must leverage a structured framework to align their IT blueprints and roadmaps to address the architecture considerations critical to success in the context of the cloud.
Best Practices for CIOs and CTOs in Deploying a Multi-Cloud Environment
My team identified ten best practices to assist FI CIOs and CTOs as well as their teams in implementing cloud-based environments. They are summarized in the table below:
The checklist in this table, also outlined in my latest report, facilitates IT leaders’ efforts to create or adapt their architectures, IT roadmaps, and budgets to enable the migration to the cloud. Exclusively for members of the Financial Services CIO/CTO Advisory Practice, banking and FI IT leaders can use these practices as a framework to effectively structure the implementation of cloud services solutions alongside hosted systems within the enterprise technology ecosystem.
Curious about how these practices can facilitate your organization’s migration to a cloud infrastructure? Contact me at [email protected] to start the conversation.