I will get straight to the point: The time is right for the financial services (FS) industry to leverage the power of the cloud. It dovetails quite nicely with retail banking’s competitive moves to provide users with more flexible choices, banking simplification and an improved, positive customer experience. Indeed, I am encouraged that roughly 70% of my financial services customers are looking to move more services to the cloud, and approximately 50% have a cloud-first strategy.
This is a departure from the FS industry’s history with the public cloud. Historically, it has shied away from cloud adoption—not because it’s against embracing new technologies for business improvement, but because it is one of the most heavily regulated and frequently scrutinized industries in terms of data privacy and security. Concerns regarding the risk of change and impact to business continuity, customer satisfaction, a perceived lack of control, data security, and costs have played a large role in the industry’s hesitation to transition to the cloud.
More and more, banks are moving applications on the cloud to take advantage of scalability, lower capital costs, ease of operations and resilience offered by cloud solutions. Due to the differing requirements on data residency from jurisdiction-to-jurisdiction, banks need to choose solutions that allow them to have exacting control over transient and permanent data flows. Solutions that are flexible enough to be deployed in a hybrid mode, on a public cloud infrastructure as well as private infrastructure, are key to allowing banks to have the flexibility of leveraging existing investments, as well as meeting these strict regulatory requirements.
Although the rate of cloud adoption within the financial services industry still has much room for growth, the industry is addressing many of its concerns and is putting to bed the myths surrounding cloud-based security. Indeed, multi-cloud adoption is proliferating and it’s becoming clear that banks are increasingly turning to the cloud and into new (FinTech) technology. In some cases, banks are already using cloud services for non-core and non-critical uses such as HR, email, customer analytics, customer relationship management (CRM), and for development and testing purposes.
Interestingly, smaller banks have more readily made the transition by moving entire core services (treasury, payments, retail banking, enterprise data) to the cloud. As these and other larger banks embrace new FinTech, their service offerings will stand out among the competitive landscape, helping to propel the digital transformation race.
What’s Driving the Change?
There are several key drivers for the adoption of multi (public) cloud-based services for the FS industry, including:
- Risk mitigation in cloud migration. Many companies operate a hybrid security model, so the cloud environment works adjacent to existing infrastructure. Organisations are also embracing the hybrid model to deploy cloud-based innovation sandboxes to rapidly validate consumers’ acceptance of new services without disrupting their existing business. The cloud can help to lower risks associated with traditional infrastructure technology where capacity, redundancy and resiliency are operational concerns. From a regulatory perspective, the scalability of the cloud means that banks can scan potentially thousands of transactions per second, which dramatically improves the industry’s ability to combat financial crime, such as fraud and money laundering.
- Security. Rightly so, information security remains the number one concern for CISOs. When correctly deployed, cloud applications are no less secure than traditional in-house deployments. What’s more, the flexibility to scale in a cloud environment can empower banks with more control over security issues.
- Agile innovation and competitive edge. Accessing the cloud can increase a bank’s ability to innovate by enhancing agility, efficiency and productivity. Gaining agility with faster onboarding of services (from the traditional two-to-three weeks to implement a service to almost instantly in the cloud) gives banks a competitive edge: they can launch new services to the market quicker and with security confidence. Additionally, the scaling up (or down) of services is fast and reliable, which can help banks to reallocate resources away from the administration of IT infrastructure, and towards innovation and fast delivery of products and services to markets.
- Cost benefits. As FS customers move from on-prem to cloud environments, costs shift from capex to opex. The cost savings of public cloud solutions are significant, especially given the reduction in initial capex requirements for traditional IT infrastructure. During periods of volumetric traffic, the cloud can allow banks to manage computing capacity more efficiently. And when the cloud is adopted for risk mitigation and innovation purposes, cost benefits arise from the resultant improvements in business efficiency. According to KPMG, shifting back-office functions to the cloud allows banks to achieve savings of between 30 and 40 percent.
A Fundamental Movement
Cloud innovation is fast becoming a fundamental driver in global digital disruption and is increasingly gaining more prominence and cogency with banks. In fact, Gartner predicts that by 2020, a corporate no-cloud policy will become as rare as a no-internet policy is today.
Regardless of the size of your business—be it Retail Banking, Investment Banking, Insurance, Forex, Building Societies, etc.—protecting your business from cybercriminals and their ever-changing means of “getting in” is essential. The bottom line: Whatever cloud deployment best suits your business is considerably more scalable and elastic than hosting in-house, and therefore suits any organisation.
Read the “2018 C-Suite Perspectives: Trends in the Cyberattack Landscape, Security Threats and Business Impacts” to learn more.
Toplis is an Account Director for Radware and has two decades of experience working with complex global customers. Collaborating with Financial Services customers and partners, Toplis is passionate about assisting her clients to provide secure, highly available application services for the best customer experience in today’s digital transformation age.
*** This is a Security Bloggers Network syndicated blog from Radware Blog authored by Sandy Toplis. Read the original post at: https://blog.radware.com/applicationdelivery/cloudcomputing/2019/01/now-or-never-financial-services-industry-and-the-cloud/