One of the most common perceived concerns when adopting the cloud is the issue of security. For organisations like banks, safeguarding customer data is priority number one, so security is always going to be a primary consideration when implementing new technology. However, these perceived security issues are rife with misconceptions. Traditionally, banks have been reliant on legacy systems and are often reluctant to make changes to their technology infrastructure, but as demand for the latest technologies continues to ramp up, it’s time organisations followed suit. Although moving to the cloud may seem intimidating, banks have a huge amount to gain from doing so and the process needn’t be painful.
Benefits of the cloud
Before migrating to the cloud, banks must ask themselves several questions, including: do they have the means? Do they have systems that could benefit from migration or that need an upgrade? Is there a benefit to migrating the workload? Understanding the value of moving to the cloud and what they hope to achieve in doing so is essential. One of the most significant benefits of the cloud is its potential to help banks reduce core costs, in particular those associated with delivering new solutions, as well as overall operating costs. This is due in part to the fact it removes the cost of the upgrade cycle that comes with physical infrastructure. It also means banks no longer need on-site infrastructure management, thus allowing banks to focus resources on value added functions that are more 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. This incurs a greater impact in time and money. Adopting cloud allows banks to scale on-demand, with cloud services able to expand and contract as needed almost immediately. This provides a far better capability to manage costs in line with user and business demands.
Fortunately, banks needn’t see adoption of the cloud as an all or nothing venture. Instead, it is possible to migrate in stages. Vitally, banks must acknowledge that doing a ‘lift and shift’ will offer limited benefit to their organisation or their customers as their workloads won’t be cloud-ready or scalable. Banks should see the move to the cloud as a gradual transition and start by picking the most pressing workloads and services and migrating them to the cloud in a controlled manner. This approach will ensure workloads are moved across securely, nothing is lost in the process and that customers aren’t impacted by significant periods of downtime. This will result in them having a hybrid technology infrastructure, at least in the short-term, which research by IBM found that 87% of outperforming banks are using to reduce operational costs.
As many banks are reliant on legacy systems, moving to the cloud, even as part of a gradual transition, can seem daunting. Therefore, seeking assistance from third-party fintechs that are much more accustomed to the technology and have the experience of carrying out many cloud migrations can help to ensure that the process is smooth and secure.
Banks burdened by legacy systems, which were once instrumental to their daily operations, are now seeing these as an inhibitor to growth and innovation. Research by Fraedom has found that almost half (46%) of bankers see legacy systems as the biggest barriers to the growth of commercial banks. Consequently, migrating to the cloud would help banks overcome this issue, whilst also offering additional cost-savings. Vitally for traditional banks, the increased agility and innovation that cloud offers has the potential to generate significant and continued return on investment.
A report from Accenture has found that “cloud adoption is integral to enabling banks to quickly add new online services, develop applications and improve customer experience”. The ability to build new products and features faster and get them to market quicker will enable them to offer customers the innovative technology more commonly associated with challenger banks. Banks need to provide technology that is driven by consumer demand and their requirements and moving to the cloud will allow them to build, test and bring products to market quickly, allowing their developers to adopt a fail-fast approach to creating new applications and testing new features. This will not only enable banks to keep their customers happy, but it will also give them the opportunity to get ahead of their competitors at a time when those institutions that fail to innovate and adopt the latest technology could see themselves falling behind.