From pariah to prerequisite: Why banks are rethinking public cloud
Banks eat up data, even when standing still. To cope with increasingly digital-hungry customers – and satisfy their craving for service innovation, seamless access and 24/7 control – they need to be able to scale-up data capacity and connectivity fast. And that means locating more services and back end processes in the cloud.
However, legacy in-house systems are already creaking at the seams (thanks to PSD2, open banking, APIs and instant payments), leaving banks with a new dilemma: “What if my private cloud simply isn’t enough?” Followed swiftly by the million-dollar question, “How much investment will it take to make it bigger, faster and safer?”
Removing the cloud ceiling
For most pragmatists, the solution is simple. Why build (or bolt on) new cloud-server estates, when you can simply hop aboard one that’s already been built for global scale and speed?
With a plethora of existing banking enterprise and operations processes, CRM functions and content already hosted in third-party public clouds, migrating core banking may be the next logical step.
Yet banks have traditionally steered clear of public cloud as a solution for core infrastructure. Mainly due to historic, headline-hitting, issues associated with compliance, security, resilience and control. But all that is changing.
De-demonizing public cloud
“Out-of-the-box” cloud providers such as AWS, Microsoft Azure and Google Cloud, have invested heavily to create cloud infrastructure and software that is financial services-ready and bank-reg compliant.
Their purpose-built Level 4 and 5 data facilities, offer new levels of resilience and enhanced security. In addition, they are rolling out new regional hubs with specified data centre locations to satisfy data protection laws such as GDPR. In many cases, their multi-tenanted clouds may actually be more secure than a bank’s own private cloud because they make it difficult to target a particular company or data set.
While trusting another party to maintain vital processes is not something that banks will enter into lightly, failure to explore public cloud options could cost them dear – and leave them outpaced by digital challengers like N26, Starling Bank and Monzo, which are all using public cloud to support their services at scale.
Four reasons to outsource cloud
- Access to cloud innovation: Based on leading-edge technology, with shorter investment cycles, public cloud can deliver huge improvements in enterprise performance and efficiency and the ability to tap into cloud-delivered applications that drive better customer insights and experiences.
- Fast-track competitive services: Moving from a build to buy model, means banks can compete head on with nimbler and more responsive challengers by focusing less on IT and more on customers. With more robust and flexible cloud platforms, they can accelerate niche services e.g. blockchain and software containerization.
- Reduce costs and effort: The biggest global banks are already saving billions of dollars from cloud adoption, cutting technology infrastructure and data storage costs as well as estates and facilities. Not only that they are improving risk mitigation and ability to combat financial crime.
- Maintain uptime and empower growth: Public cloud helps banks to reduce risks associated with capacity, resiliency, and redundancy. It also improves scalability helping them to grow and accommodate spikes in demand.
When evaluating public cloud, remember it doesn’t have to be an all or nothing approach. Many smart banks, like Fortis, are getting the best of both worlds by adopting a hybrid cloud strategy. This lets all of them harness all the benefits of public cloud while using their private cloud to lock-down sensitive and critical assets.
Smoothing data migration
Whether hosting your cloud in-house, using a third-party or both, the secret to success is ensuring smooth integration between the various multiple cloud environments, together with seamless data transfer, backup and security.
Banks will need help to move their assets, to the cloud, across multiple clouds and cloud geographic regions while also integrating with their on-premises data centers.
Data storage and security partners with the relevant expertise, scale and solutions are key to smoothing their journey and helping them set their cloud goals even higher. Find out how you can embrace new cloud strategies. Download Commvault’s latest whitepaper on Architecting the future of banking: Four steps to accelerate uplift and secure data assets in the cloud.