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What is stopping banks from transitioning to the cloud?

The short answer – nothing. For the slightly longer answer, read on. The COVID-19 pandemic has increased demand for the cloud so much that Deloitte forecasts revenue growth among the largest public cloud providers will be at least 30% for 2021. I’d say this is a fair and easy estimate to make.

Why is moving to the cloud so popular? Doing so allows banks the flexibility to manage applications on the infrastructure that best suits them, but above all, it gives them the opportunity for improved business and customer outcomes. However, there are still things stopping some banks from making the transition.

Many legacy systems don’t work in the cloud

A lot of traditional banks have legacy systems that simply don’t work in the cloud, or that they would rather not risk trying to transition over, so they have to adopt a hybrid model. This includes systems that were coded in COBOL or other old programming languages, and systems with connectivity constraints, such as remote islands.

Lack of clarity on what can move to the cloud

On top of this, many financial organisations struggle to determine what systems they can actually move to the cloud, and which have to be kept on-premise. For example, for legal reasons, some of a bank’s customer data might need to be stored on a server in the UK or EU. Leaders may be unsure of whether they could be introducing regulatory risk by moving a certain system to the cloud.

Moving to the cloud can be slow and expensive

Banks have to weigh up the total cost of ownership with the business case for moving to the cloud to decide what is right for them. They need to look at the costs of hosting data on-premise and maintaining their own servers versus undergoing a transition to the cloud and ongoing costs of use. Without the right resources and technical expertise, migrating can be expensive. The more time-consuming the project, the costlier the transition can be.

Technology can help…and the business case should be outcome led

To overcome these challenges, banks need technology that makes migration quick, effective and painless. The actual transition phase really doesn’t have to be difficult, as long as IT teams have the right technology in place, and the risk team are on hand to check the security protocols. There are modern technology solutions on the market that allow banks to have applications in production on the cloud in two to three months as opposed to years.

Containerisation can also help. In simple terms, containers refer to packages of application code with the files and dependencies the code needs in order to work properly. This makes it more ‘portable’ and means it can run on any platform or cloud. The real missing gap though is often not getting enough involvement from the teams in operations or distribution who are dealing with the customer-facing processes and outcomes. The business case for migrating to the cloud is all around being able to bring processes together better, to adapt and change to get the right outcomes for your customers and staff more flexibly.

Moving to the cloud is worth it

It makes sense for banks to invest in moving to the cloud. In doing so, financial organisations will benefit from greater agility, meaning they can adapt to changing customer demands quickly and easily. With modern technology, transitioning to the cloud can be a positive process. Banks just need to address the obstacles head-on and invest in the right solutions. Only then they can reap the rewards moving to the cloud offers.

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Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 07 May, 2021, 13:451 like 1 like

In a word, Bill Shock (I know that's two words, still...).

That has already driven some banks like Wells Fargo to move back to On Prem from Public Cloud. Their experience is likely scaring away other banks from moving to Public Cloud.

I believe hidden costs like "Egress Charges" are a major cause of public cloud Bill Shock. 

More in my comment here