Connect with us

Technology

Cloud Native Storage: Why It Should Matter to Banks and Fintech Companies

Cloud Native Storage: Why It Should Matter to Banks and Fintech Companies 1

By Alex Chircop, Founder and CEO, StorageOS

 

Cloud native storage supports the kind of data availability needed by developers to quickly build, launch, and scale banking and financial applications. But what is cloud native storage? Where did it come from? And how does it benefit the sector?

 

Rewind: What’s cloud native again, please?

Before we get into talking about cloud native storage and its increasingly important role in delivering banking and financial services, it’s worth recapping what cloud native infrastructure is. A cloud native approach enables developers to build scalable IT applications across a mixture of on-premises infrastructure — such as data centres — and cloud environments.

 

Cloud native environments allow developers to decouple their applications from their infrastructure, mix and match IT resources, and deliver new services to market in a much shorter timeframe. They also provide developers with automation, scalability, and self-service capabilities for their applications — while maintaining a self-healing IT infrastructure. As such, they’re far removed from the typical monolithic mainframe environments that all banks and financial institutions traditionally used a couple of decades ago.

 

Cloud native as a catalyst for change

Before cloud native computing, if a bank wanted to develop a new service, it would have to formally launch a new internal project. The project leaders would define what IT infrastructure they needed, and someone would have to authorise the IT costs. Then somebody else would have to purchase it. Finally, a team of IT experts would have to deploy the infrastructure in a data centre — and the project could finally begin.

 

If you were lucky, you’d have the servers in place and ready to start work six months down the line. Although painfully slow, it was the way that the whole sector worked, so it didn’t impact competitiveness. But Open Banking changed all that and gave fintech start-ups the chance to compete with established high street names. And compete they did — using cloud native as the catalyst to rapidly develop, launch and scale their applications. They say a week is a long time in politics. But with cloud native adoption propelling innovation amongst new banks and fintech companies at lightning speed, six months became an eternity for the sector — and an unsustainable eternity, at that.

 

Three cloud native essentials: Containers, Kubernetes, and storage

 

Containers

Several technologies underpin cloud native infrastructure — the simplest is containers. Containers came to the fore around 2013. They free developers from being tied to a specific data centre, and later, from even having to work with a single cloud service provider. Suddenly developers could work wherever there was IT capacity, and the portable application was born.

 

Kubernetes

Kubernetes is the building block that sits on top of containers and allows developers to specify (developers would say declare) all the resources they need to build applications — defining automation, security, scaling and other policy preferences. It creates an environment where neither the developer nor the application itself needs to know if it’s running on a service from Amazon or a server from HP. Instead, Kubernetes allows developers to say, “this is what my application needs – go ahead and make that happen with the pool of resources available to you.” For that reason, if you wanted to use a technical term, developers would call Kubernetes an orchestrator.

 

Today, Kubernetes is the worldwide de-facto orchestrator across all sectors of the economy and all cloud service providers. There’s a huge developer community behind it and a vast amount of knowledge, certification, and learning — meaning that there’s a wealth of expertise to tap into. These factors have created incredible platform stability, giving even the most conservative, risk-averse parts of the sector a growing sense of confidence about cloud native infrastructure adoption.

 

Cloud native storage

So, you’ve got your container, you’ve got your orchestrator, now you need to take care of the associated data. This is where cloud native storage comes in. If you’ve decoupled your application and infrastructure, you don’t want to end up being dependent once more on a physical box of storage — you want to decouple your data too. Cloud native storage does just that. It automatically scales and allocates storage requirements in line with application and developer needs. This means application performance isn’t compromised by unavailable storage during peak demand. For this reason, we believe cloud native storage is the only way to achieve the performance levels needed to deal with the volume of high worth transactions while providing the reliability and integrity necessary to protect each tiny piece of data.

 

So, have the big banks gone cloud native? 

It’s pretty much guaranteed that every financial organisation of every size is deploying cloud native computing in some form or another right now. They’re embracing mobile applications, online working and providing a fleet of services that consumers can access globally — all of which function most efficiently and reliably when underpinned by cloud native storage resources.

 

However, the reality on the ground is that larger organisations still maintain huge pools of physical infrastructure — including storage resources — that support critical customer-facing applications, and it’s going to be a long while before they convert the majority to cloud native environments. Note that we’re saying the majority of applications here. That’s because we don’t believe the biggest banks and financial sector companies will ever become 100% cloud native. These organisations have a history of maintaining mainframe on-premises technology long after being retired and decommissioned in other sectors (take ATMs, for example).

 

Established financial organisations, because of their size and long trading history, don’t have a single pathway to adopting cloud native or a single pace of adoption. There are parts of these organisations — for example, those that deal with mortgages and pensions — that are incredibly conservative and risk-averse. This means they’re likely to be amongst the slowest to adopt cloud native infrastructure.

 

By contrast, other departments within large banks — such as the teams behind trading platforms or mobile applications — are generally far more innovative, inventive, and forward-thinking when adopting new technology. These teams are likely to be much further along their cloud native and containerised application deployment journey.

 

Long-term benefits of cloud native infrastructure

Continuous application updates

Cloud native infrastructure allows organisations to create automated continuous test and deploy environments. In the past, a bank might roll out system updates every six months or so in a very choreographed way, with advanced warnings posted on banking websites notifying customers of scheduled downtime.

 

By contrast, most app-based banking and financial services that have been developed in cloud native environments probably get updated every week or maybe even daily — without needing to take the service offline or alerting customers. That seamless update process and the testing behind the scenes are based on the same technology that automates application provisioning and deployment. Developers often refer to this as continuous deployment, and it’s one of the most significant advantages of working with containers and cloud native environments.

 

Faster recoverability and less service downtime

The automation and flexibility offered by cloud native storage brings reliability and availability advantages too. One of the positive side effects of having automation in these environments is that when something breaks, the same process that allowed you to originally automate provisioning of the environment will also allow you to recover or build a replacement environment at speed — again, without taking the service offline.

 

This, of course, is important in all sectors of the economy. But the difference in the banking and finance world is that every bit of data, no matter how small, can have a disproportionately high value — making each piece of financially related data highly significant. If you’re running the end-of-day auction on a trading platform, for example, that last transaction could be worth £100 million.

 

The transaction may only form the tiniest data unit, but if you lose it, you suddenly don’t know the transaction status or what’s happened to that £100 million. And no one wants to be the person that loses £100 million somewhere in the system or to be the IT team that’s tasked with recovering it. Cloud native storage — with its in-built failover and fast recovery — limits this kind of unacceptable data loss and, should the worst happen, and information is somehow corrupted or inaccessible, it can be very quickly recovered.

 

Enhanced data management and protection

Decoupling data from an application and physical infrastructure also creates an environment that allows for a more sophisticated analysis of the information and more impactful customer experience initiatives. In addition, it provides the framework for tighter security controls to protect against money laundering and ensure regulatory compliance. In fact, you can now build compliance into the actual developer code so that it is embedded by default and automatically updated in line with changing regulations.

 

Conclusion

Cloud native technology — containers, Kubernetes, and cloud native storage — are here to stay. A recent Cloud Native Computing Foundation (CNCF) survey found that the use of containers in production has increased to 92%, up from 84% last year, and up 300% from our first survey in 2016 
— and we sense that the finance sector is probably at least a year ahead of other parts of the economy.

 

Although initially championed by smaller fintech start-ups, cloud native is far more than an aspiration or a pipedream for even the most established and traditional banks. We’ve seen for ourselves that the technology has been successfully deployed in production in several tier one organisations. So, if banks and financial sector organisations haven’t looked at cloud native — and cloud native storage — yet they absolutely must or risk getting left behind by either their more forward-looking established peers or by the new generation of fintech success stories.

Cloud Native Storage: Why It Should Matter to Banks and Fintech Companies 2

Alex Chircop, Founder and CEO, StorageOS

Editorial & Advertiser disclosure
Global Banking and Finance Review Awards Nominations 2021
2021 Awards now open. Click Here to Nominate

Recommended

Newsletters with Secrets & Analysis. Subscribe Now