Cloud has moved quickly from being seen as a competitive advantage to the new baseline of business success. Almost every business needs a cloud strategy, and this is most pronounced in financial services. Some banks are already operating on the cloud, whilst others have plans to do so.

 Those without plans must start soon. Almost all businesses are already using cloud for peripheral services - such as for CRM or purchasing – though many users may be unaware of this. There are, however, many good reasons to now move core processing and business operations to the cloud and they are well documented. I believe there are seven key reasons for doing so, which are as follows:

1. Improve agility

Improved agility is a natural outcome when moving to the cloud, as long as the migration considers all aspects of the people, process and technology involved. As a bank, you can spin up a new cloud in seconds and this redefines what business agility really means. Banks can achieve much more in far less time than was feasible only a decade ago and can seize new business opportunities quickly and cost-effectively. At a time when banks wish to become more customer-centric, cloud makes it possible to act fast without the limitation of investment hurdles or technological boundaries.

2. Boost innovation

Developers can test new ideas and software designs quickly and easily, without speculative investment in hardware or software, whilst software updates can be delivered into the production environment much sooner. With cloud, innovation will become part of ‘business-as-usual’.

3. Strengthen security

Architecturally, in theory the cloud offers a more stable, secure computing environment than an on-premise datacentre. All major cloud providers are continually investing heavily to keep their cloud infrastructure and services at the forefront of security. With cloud, you can implement by design a federated security policy that grants access only to those who require it. This significantly reduces the threat of malicious cyberattacks.

4. Achieve scale

Moving to cloud ushers in a new era of unprecedented scale, flexibility and real-time processing. There is no longer any delay waiting for equipment to be delivered and set up in your own datacentre, since with cloud peaks in demand can be managed rapidly and fast development is now possible.

5. Reduce costs

Cloud redefines the economics of running a bank. The emergence and growth of challengers proves that a virtual bank operating in the cloud can be fast, customer-centric, cost-effective and simple. With their legacy mainframes and outmoded methods, many incumbents are struggling to keep up and, in many cases, the cost of maintaining and changing the legacy is unsustainable. Cloud offers a new dawn in computing, where you only pay for what you need, thus promoting agility and fostering innovation, whilst simplifying the overall technology estate.

6. Enhance resilience 

Whilst no technology can offer 100% resilience, cloud offers a step-change in safety and soundness. With cloud, you can adapt to a crisis situation quickly and systematically, whether the origins of the problem relate to technical, process or data issues. This has become very apparent during the pandemic, with those banks already advanced in their cloud adoption journey, or built as ‘cloud-native’ having a distinct advantage. They were able to pivot their business response to a fully digital customer experience, whilst allowing their workforce to be fully and digitally remote.

7. More than technology

Although often considered as a matter of technology, cloud is about much more. In practice, it is about how you do computing, rather than where. Migrating to the cloud is a unique opportunity to transform how work gets done; to put technology at the heart of the business and harness the power of modern methods, such as DevOps, microservices and continuous delivery. Over and above these technology improvements, speaking with many of our clients and those surveyed, the true business value delivered to the organisation is the key driver of strategic cloud transformation; created by greater innovation, efficiency gains and the ability to scale.

Together, these methods empower firms deliver customer value faster, and to release new customised or bespoke features more frequently, without having to overcome technical boundaries. At a time when banks are committed to offering the best possible customer experience, cloud is the only way to harness new business opportunities quickly and become data-driven. Only cloud offers the cost elasticity and architectural flexibility of collecting, collating, analysing and storing unprecedented volumes of data, from multiple sources and in different formats.

Unlocking data at the heart of the business

Many companies are using data to boost innovation and strive towards creating a distinct competitive advantage. Data is increasingly viewed as a strategic asset that must be properly valued and accounted for, keeping compliance, security and integrity at the heart of the data strategy, whilst controlling the costs. As volumes of data grow, increasingly firms are seeking a data-on-cloud strategy that helps the organisation to utilise its data to become more agile, customer-centric and responsive to change, whilst accounting for security, compliance and regulation. Many firms are discovering that cloud is simply a better way to run their business.

However, although cloud is now a priority for most firms, getting it right can be extremely challenging and many cloud migrations either fail or are abandoned, or do not deliver the expected business transformation.

The state of the industry

Although our recent market study revealed several inhibitors to cloud migration, cost was not identified as being of major concern. Over half of respondents already have the appropriate budget allocated for the provision of cloud and cloud migration. So, the impediments to progress are not generally financial ones.

In practice, most incumbent banks have evolved around vertically integrated structures and channels with independent technologies, data stores and support teams. How to plan for and implement a technology renewal involving cloud will therefore affect almost every aspect of the firm. Many respondents in our survey noted a lack of coherence around cloud strategy, mainly because cloud is about so much more than just the technology; it’s also about people, processes, procedures and how work gets done right across the business.

However, the reality is that given the enormous technology legacy that most firms have, many will stay with their on-premise, fixed assets, fixed costs and their own datacentres for many years to come. This means that a move to cloud will often require a hybrid cloud model for many years to come, whilst they take their organisation and their technology estate through a modernisation journey.

With such high stakes, it’s time to speed up!

Moving to the cloud means doing things differently and this cannot happen quickly. Legacy technology comes with a legacy skillset that takes time to retrain or augment with new methods. Many of the world’s biggest banks are still using COBOL driven systems, written 40 or 50 years ago, which can be very challenging to integrate into a modern cloud-based environment of DevOps and microservices.

With such high stakes, many thousands of applications and so much to consider, banks are all at different stages of cloud adoption and report varying degrees of success with their migration transformation. Whilst all firms have great intentions, overall progress is slow. To stay ahead of the competition and deliver true transformation, it is now time to quicken the pace!