While historically, banks have been guilty of slacking when it comes to technological evolution, digital disruption has woken them to a harsh reality. If banks don’t get to where their customers are, new-age competition and those leading the way will do
so, and in the process mop the marketplace with the erstwhile giants.
It is this race for survival that has had banks turn their heads to cloud, especially public cloud as a means to the end. Even in the recent past, most banks were content with moving non-critical and non-core workloads to the cloud. How did the resistance
to cloud diminish?
A lot of what has changed in the past year or two can be attributed not just to the competition in the banking space, but also the fact that Cloud has itself evolved:
- Increased security and global certification against regional & global standards
- Better business continuity and availability of services offered
- Rapid expansion of Public cloud providers in new regions, establishing a higher degree of comfort among the regulators in terms of Data soverenity and compliance
Here’s how we expect the banking-on-cloud trend to play out in 2020 and beyond:
- The sharp rise in the use of public cloud PaaS services especially relational databases, data warehouse, and container-as-a-service combined with convenient private cloud options from public cloud providers that offer near on-premise experience are driving
migration of workloads that banks are typically reluctant to move to the public cloud. After turning to cloud for non-critical workloads and for international operations / new lines of business that required quick time to market, banks are now exploring options
to move higher workloads to the public cloud in their home countries with sizeable customer base.
- Industry estimates suggest that public cloud revenue will grow by about 17% in 2020 globally. The growth trend in financial services will mirror this cross-industry estimate. In 2020, a majority of financial service providers will have multi-cloud IT environments,
designed to enable workload portability and seamless delivery of functions across platforms.
- Public cloud IaaS and PaaS are expected to be the primary environment for 28% of the hosting and managed services workloads over the next two years, compared to just 9% today. Containers, Docker adoption, and container orchestration tools such as Kubernetes,
have also recorded a steep growth over the last couple of years. In 2020, containerization of legacy applications will be a necessary step in the large-scale migration of workloads to public cloud in banking, as more and more banks adopt multi-cloud architectures.
All said and done, single tenant will still be safe haven for banks due to confidential information and compliance. So how will banks reconcile with new environmental realities? How safe is the bet that Public Cloud IaaS and PaaS will grow multi-fold in
the next two years? The biggest question is – will it really happen?