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Financial Cloud Summit 2023: Strategising digital transformation and balancing trust with partners

Financial Cloud Summit 2023: Strategising digital transformation and balancing trust with partners

To successfully engage in digital transformation in the transition to the cloud, financial firms are looking for creative methods to approach their cloud strategy. In doing so, companies are dealing with issues of cost, security, and scalability. The first stage of the conference explores how companies are making strategic on visibility, data ownership, cloud providers, and more.

Discussing new digital transformation strategies emerging in the cloud in the first Strategise panel on digital transformation and the logic behind change was Siki Giunta, executive vice president of CloudSMART Offerings Strategy at HCLTech and Sonia Greenberg, associate director of cloud and managed services at FactSet, moderated by Finextra senior reporter Paige McNamee.

Greenberg started off the panel by remarking on the issues in coping with the demands of consumers when it comes to data and managing alternative data within alternative banking schemes. She continued that that cost pressures due to profit margins are prevalent and reducing costs whilst dealing with monolithic technologies is a major struggle that financial organisations are facing.

Giunta stated that digital transformation and cloud migration are two sides of the same coin; you cannot have one without the other. She continues that there is no “end state” to transformation, it is an ongoing process of change.

She stated that cloud is an ongoing, morphing process: “The first invoice that was released by AWS to Amazon was April 28, 2004. So we have in a long run this cloud market that morphs all the time. I think the most important thing constantly in this is that relationship with the business and their value chain, and how to adopt cloud services and car technology to advance it.”

Sustainability needs to be taken into consideration when financial corporations digitally modernise, Giunta emphatically stated: “We are actually starting for the first time to collect data to really clear understanding of our digital footprint, our cloud implementations. Cloud providers deliver a lot more focus and a lot more transparency. I think internally in financial services are considering the possibilities, adding to the industry like utility, or healthcare, they are all starting the journey to understand their footprint. When you start collecting the data, you see straight away, should I do this left unchecked? Or should I rewrite processes in a more sustainable, contemporary, and easy to maintain way?”

Greenberg agreed with Giunta on the cloud providing new resources in regards to ESG and how new tools are available to build products the right away. “As we keep saying, it's about what problems we are trying to solve. It's really a breeding ground for innovation for both large institutions and small institutions to think to themselves, what's the real value proposition of what we are trying to provide? How do we do that better?”

Giunta stated that there needs to be a “North Star” when applying agile techniques in digital transformation, go in with pathfinders, look for common patterns in a set of applications and build the foundation on which cloud services can operate to reap the benefits.

Greenberg remarked that hybrid cloud is the future and there are new technologies that will focus on data meshing and solve emerging problems in the transition to the cloud.

She commented: “Honestly, I don't think we are going to settle in a place where everything is fully in the cloud, and I don't think we are going to settle in a place where everything is on premise. There was a latest survey done in 2021 where they pulled in banking CEOs and over 70% said hybrid cloud is the future for them. I truly believe that is what will happen. So we have to build product especially when it comes to corporations that are going to do both use cases and data masters to help with that. There is more technologies coming that will solve those problems as well.”

When asked how financial institutions should approach people and the talent during the cloud transformation process, Giunta responded that cloud can be cruel, and that it is easier for the younger generation to use cloud-native solutions. She highlighted that building an organisation of change requires a change to the culture, to foster skills that requires the people to change and only then the organisation will follow.

Greenberg stated that learning has inspired change from the bottom up, that students are graduating with skills in Python and code, with degrees in product development, and that they are seeing the value of new technologies. Within the cloud, there is an experience divide in the social and technical aspects of creation. Giunta stated that within the industry, corporations should harvest experience and partner them with younger people who are able to adapt easily to utilising modern technologies and techniques.

The second panel on Strategise explores how companies are aligning their partners with their cloud strategy and prioritising security, led by experts Stewart Davies, global SaaS commercial director at Temenos and Andy Sturrock, CTO at Atom Bank, moderated by Finextra reporter Niamh Curran.

Curran asked how institutions are outsourcing data to the cloud and how trust can be balanced with cloud providers. In response, Davies stated that building trust happens over time and there are a myriad of factors that are taken into consideration.

He commented that how data is stored allows companies to process how the operating model works, once understood how regulatory obligations are met and data is secure, then they need to determine that it is all secure, and these foundational pillars create a groundwork for a healthy relationship.

Sturrock added that accountability is not outsourced, that it is a joint venture, therefore there needs to be a sturdy relationship built between the supplier and financial institutions early on to keep ahead of regulation and operate smoothly.

Davies stated that many early conversations with cloud providers focus on technology, but they should place more emphasis on how trust is delivered and the service is provided.

Sturrock stated that there is no ‘either/or’ situation when it comes to security and technology: “If you pick technology because it provides great functionality, but it risks security that's not going to be work. If we lose our customers money, that's the end of the organisation. At the same time, it could be the most secure thing ever, but doesn't provide any features. That's not good for our customers either. So it has to be both, and I think it's just utterly intrinsic, that they go together.”

Sturrock spoke to what banks are looking for in cloud providers, noting the GCP outage that occurred in 2022 was a scare, but explaining that it is important to ensure that there is an understanding of how the datacentres operate and how protective measures are being secured and to do background checks. Cloud has numerous benefits, but there is a level of worry involved in relying on an outside party that needs to be addressed.

Davies stated that handling international regulation they look for the “high watermark”; keeping an eye on what is changing in different nations when it comes to regulation when considering cross-border operations.

Sturrock stated that while it is risky placing trust into another organisation’s hands, there are measures in place to ensure that they are comfortable in the relationship. He states that at Atom, they possess encryption keys for everything that provides a level of comfort.

He expanded: “There was just a different way of doing security in the cloud. The old days used to have a big firewall on the outside and you will see that was going to keep everything all the intruders out. You have got to assume that that your network couldn't be breached and therefore you need to have certificates and authentication between all of your different micro services and all the different components and other aspects. But again, that's just kind of doing security in a modern way that we hae evolved. I think if you do your API right, you can be as secure in the cloud as you can be.”

When asked about initiating a cultural change in financial organisations’ relationship with cloud providers, Davies stated that it is all about understanding what you do and what your partner is doing and to maintain communication to move towards coming up with solutions and creating customer value.

Sturrock observed that opting for the right cloud for the appropriate workload is a method that leverages the value of various cloud providers.

Davies closed with a statement: “We have done exercises with Tier 2, Tier 1 banks where we will just take it on their payments business or we have taken on their offshore business. You go through the group reader, but it is almost a proof of value or proof of concept of them in terms of the way that they are building that into their strategy. Certainly, we are not expecting for all Tier 1s to be in their core SaaS provider in public cloud, but actually what we are seeing progressively is that journey of taking parts of the business and exploring and seeing what they can do, or entering new territory.”

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