The Future of Finserv is Hybrid

By Eyal Manor, GM and VP of Engineering, Google Cloud

Financial institutions face increasing challenges as they try to keep pace with evolving client expectations, competition and changing regulations. Customers expect seamless, tailored experiences—and loyalty is increasingly difficult to maintain in a digital-first era. Whether it’s real-time payment processing, fraud detection notifications or global P2P transfers, financial institutions need to keep pace with client expectations and the power of the cloud will help them get there.

Historically, financial institutions have been hesitant to fully embrace the cloud for data security reasons, and have kept most of their data in on-premise data centres. Although, this process has inadvertently created siloed and disparate systems that limited agility for financial institutions. According to Forrester, only 26% of financial services firms acknowledge that transformation is never-ending, 19% are still considering what to do, and 14% mistakenly think they’re done. On-premises solutions are not scalable enough to deliver the needs of today’s on-demand consumer, nor are they cost-effective in the digital economy.

Making the choice to completely re-evaluate infrastructure can be intimidating for many reasons, but modernizing infrastructure shouldn’t happen just when a financial institution is at a critical juncture. The modernization exercise should be an always-on, continuously iterative process. For this to happen though, financial institutions need to adopt hybrid and multi-cloud solutions to scale with their customers and provide seamless experiences. By adopting these solutions, financial institutions absorb value-added technologies as they emerge, and can embrace the cloud at their own pace and in their own time.

The Value of Hybrid and Multi-Cloud Solutions

With hybrid and multi-cloud platforms, financial institutions can freely choose which combination of services and providers will best meet their needs and their customers over time. Locked in and proprietary systems aren’t good for anyone. An open approach that allows collaboration across multiple cloud providers fosters innovation in the industry. For KeyBank, a hybrid approach is advantageous because it means less time spent managing the complexities of using multiple clouds. This approach enables the nearly 200-year-old bank to embrace the cloud while also keeping systems that must run well in data centres online. It also means that KeyBank has more flexibility to pick and choose cloud providers for each new task based on their relative costs, instead of being locked into one particular cloud vendor.

Not only do hybrid solutions enable financial institutions with unparalleled flexibility, but multi-cloud solutions also provide choice to migrate and modernize infrastructure across multiple clouds. Multi-cloud and hybrid platforms like Google Cloud’s Anthos, which is built on open-source projects like Kubernetes and Istio, provide financial institutions the freedom to run their applications wherever they are–even on-prem–while still maintaining the managed platform experience.

Open and flexible platforms also provide financial institutions a line of sight into their data, regardless of where it resides. This flexibility is ideal for regulated industries that require hybrid needs, due to the nature of sensitive information. Take DenizBank for example. It relies on a hybrid cloud strategy to comply with various regulatory requirements like data locality and sovereignty which mandates that some or all applications reside on-premises in certain countries.

Hybrid and multi-cloud strategies are necessities for helping financial services future proof.

Most industries today are moving to a cloud-native infrastructure, but the financial services industry is still deeply rooted in legacy technology for security or functionality reasons. In fact, according to Forrester, 20% of survey respondents say legacy technologies are one of the greatest challenges within a financial services organization for executing its digital transformation. The reality is that these organizations will not be modernizing their existing systems all at once. But, with the help of hybrid and multi-cloud infrastructure, financial institutions can move at their own pace and modernize select applications while continuing to take advantage of infrastructure investments that they need to keep in data centres. By using multi-cloud and hybrid environments, financial institutions can make existing and cloud-native applications work more seamlessly together.

Not only do cloud providers help with this transition, but they also partner with companies who aim to make this transition easier, like Temenos. Temenos partnered with cloud providers to help financial institutions digitally transform, by providing access to technologies like Anthos that offer the freedom to innovate and reap the true benefits of multi-cloud. Not only will financial institutions continue to manage legacy systems, but they will always balance ever-changing regulatory and data-security requirements. Hybrid and multi-cloud environments can help to manage these shifts by enabling organizations with the ability to control data regardless of where it resides–in the cloud, on-premises or a combination of both.

What’s next? 

The time is now for financial institutions to think about modernizing their infrastructure–hybrid and multi-cloud environments will help them get there. According to Forrester, in addition to cost reduction, cloud also brings the flexibility and agility that financial services firms need to become digital businesses. It’s beneficial for financial institutions to adopt multi/hybrid environments today to digitally transform to keep up with, and even get ahead of evolving customer demands, regulations, security and more. Hybrid and multi-cloud platforms will help financial institutions thrive in the future by streamlining processes, cutting costs and optimizing infrastructure spend—all while adhering to industry security regulations and best practices. These environments will become invaluable for financial institutions as they look to accelerate innovation without the weight of the past holding them back.