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Finance

Why Cloud Computing is Critical to the Future of Financial Services

Why Cloud Computing is Critical to the Future of Financial Services 3

Why Cloud Computing is Critical to the Future of Financial Services 4By Chris Davis, Managing Director, Kyndryl Ireland (and Senior Partner at Bank of Ireland)

As an industry on the cusp of digital transformation, financial services (FS) is fast becoming an IT business. It’s no longer a question of periodic upgrades to bring FS infrastructure up to a stable and performant level, it’s a permanent and ongoing task of maintaining the needs of IT. As with any industry in the process of wholesale transformation, each individual FS business will be in a different place with regards to their IT capabilities and needs. Although there are trends across the board, the reaction to those trends needs to be bespoke; one organisation might be looking at migrating parts of the business to wholly new systems, for example, while another might be better off building on existing investments. Migrating to the cloud affords FS organisations the flexibility they need to react to these trends, but they need the right expertise to do so.

The importance of finding the right partner

While FS organisations need to think and operate like IT businesses to keep pace with demand, many don’t have the in-house expertise to effect this transformation. To get around this, many FS companies are partnering with IT infrastructure solutions providers to operate their mission-critical IT infrastructure and to increase flexibility of on-demand scalability and global service availability.

Digital transformation does not happen overnight, however. For example, Kyndryl has been working with Germany’s leading bank, Deutsche Bank, to operate its IT infrastructure and support Deutsche Bank’s cloud migration strategy. The collaboration, which has been ongoing for 20 years, is one of the largest and longest-running vendor contracts in the FS industry.

Deutsche Bank recently made the decision to renew the working relationship with our experts from Kyndryl after two decades, based on their experience in operating mission critical infrastructure services for the financial industry, as well as Kyndryl’s continued ability to adapt to the changing needs of the banking and IT industry. This partnership goes to show that transformation is an ongoing process, and to get it right, banks can’t go it alone.

Why cloud computing is key

For FS firms, the benefits of cloud are substantial: the ability to deliver business value faster and to innovate at scale, increased data processing (approaching real-time), unique customer experiences, greater business agility and the capacity for continuous transformation. But before you start to develop a plan, it’s critical to determine exactly the business outcomes that you want from the cloud.

While cloud transformations present major opportunities in the FS industry, they also pose significant challenges. Without a clear understanding of the process, from risks and regulations to customer expectations, from how the customer journey will unfold to how things might go wrong, a cloud transformation is less likely to succeed. For FS firms, successful cloud transformations hinge on data risk management. Financial institutions have been slower to roll out cloud because of concerns meeting regulator demands related to transactions, processes and managing customer information.

Considering cloud’s full potential

To ensure successful cloud adoption, FS organisations need to consider the full potential of cloud computing. Start by setting a clear direction for how the organisation can leverage cloud solutions to support business priorities, the transformational journey, and the necessary operating model and capability changes required. Once this clarity is achieved, firms can then define the scope based on business and technical drivers for moving to the cloud, including attributes like performance, operations, architecture, cost, risks, security and compliance, business criticality and migration plans. This information can be used to develop a robust business case for the applications and workloads that can benefit most from early migration to the cloud. To take advantage of serverless computing and server scalability, for example, organisations should consider making their apps cloud native. That means they’ll have to be configured and/or rewritten for the cloud or replaced by apps that were specifically designed for cloud architecture.

FS organisations should explore where they can benefit from replacing legacy database platforms by migrating to a cloud-native database. Doing so can improve performance, provide full cloud-native compliance and save money on license fees. Organisations should also explore where they can benefit from modernising existing apps to use cloud functionality.

The journey to digital transformation is never linear, but with the right partner, the right expertise and the right technology, it’s a journey that can prepare organisations for the IT-centric future of FS.

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