By Rob Kim, CTO of Presidio
Innovation in financial services takes many forms from mobile app improvements to new applications of AI technology and much more. In the year ahead cloud infrastructure services will be the key to scale digital innovation. Equally important is alignment with the business leaders. Technology leaders provide impactful business recommendations on modernizing digital capabilities, however, to be most successful it starts with being equals in business strategy development.
In a survey of IT decision makers, 47% are say cloud technology allows them to be more agile and support innovation. Financial services companies are more likely than any other sector to drive innovation, scale up their systems and meet compliance standards from cloud adoption.
Using digital and cloud-native services can accelerate innovation and speed up differentiating go-to market strategies. Whether you’re upgrading your app or refreshing your computer systems, cloud technology can help make this process easier. Patching and updating versions of apps supported on legacy platforms/languages can lead to increased planned downtime and performance issues, and ultimately frustrated customers and employees.
Cloud-native services development offers a stateless, microservice-based approach to workload functions, increasing speed and providing a better response for the end user. Full automation enables a true DevSecOps culture shift, achieving faster time to market with less human interaction during elevations, ensuring improved resiliency. Hyperscalers provide optimal elastic scaling features, ensuring the institutions can handle any market fluctuations and that client data is always available.
Unlocking valuable data can be a game changer. Like many other industries, financial services organizations continue to struggle to fully utilize their data – especially legacy mainframe platforms. Our research found that 67% of financial services professionals reported challenges with too many data sources, and 62% find having actionable data accessible a challenge. Without fully utilizing data, companies risk losing out on valuable customer feedback or data that could provide insights on building customer lifetime value (LTV). Cloud can make it easier to analyze data, find meaningful insights and power smarter business decisions more easily. For example, new solutions for clients such as automated portfolio management using AI/ML could replace human money managers who might have personal aspirations driving their choices.
Another benefit is the ability infinitely scale up systems with ease through cloud services. Mergers and acquisitions are par for the course in the financial industry. In fact, the U.S. mergers and acquisitions market experienced record-setting transaction volumes last year. For a bank scaling up through a merger or acquisition, you need the proper infrastructure to support the transition of thousands of data points and the network load of new employees potentially overnight. Cloud systems are well equipped to handle this transition as they provide banks with a flexible, secure and regionally distributed set of infrastructure resources (compute, storage, networking). Further, utilizing cloud VM and cloud native services will make it easier for future mergers and acquisitions to accelerate integration efforts, leading to more growth and innovation.
Compliance is another vital function where cloud technology can be beneficial in helping to more easily meet required standards. Due to the amount of money changing hands per second, financial institutions are a top target for cybercriminals. Thanks to standards like ISO 27001 and guidance from the Cybersecurity and Infrastructure Security Agency (CISA), cloud is a key component in achieving and maintaining regulations to protect assets. In fact, more than half (57%) of financial services providers say one of the top drivers for adopting the cloud is the role it plays in helping them meet compliance standards. Upgrading to the cloud, facilitates consistently meeting these standards and provides a greater level of protection than those offered by legacy systems, some of which lack the technology requirements needed to meet these standards, potentially leaving systems exposed.
As financial service providers seek out ways to set themselves apart from their competitors, they’re trying everything from new apps and services to experimenting with the metaverse. However, one clear differentiator is cloud.