The State of Cloud Transition in Financial Services

For financial services companies, the public cloud offers many advantages. For example, a recent analysis by the Bank of England estimated that adopting out-of-the-box services offered by hyperscalers such as Google could reduce technology infrastructure costs by up to 50%. Cloud services are also more resilient and efficient, and therefore less vulnerable to outages.

Moving to the cloud is therefore theoretically very good for banking services. But there are a few concerns; for example, the concentration of major players that dominate the cloud market — according to the latest figures from technology analyst firm Gartner, the top five cloud providers currently account for 80% of the market, with Amazon holding a 41% share and Azure accounting for almost 20% of the market – and, of course, security flaws.

So what could your institution gain by moving to the cloud besides saving money? We asked leading analysts and financial institutions for their ideas and best practices for adopting cloud services. Here is what they told us.

RELATED: Learn how moving to the cloud can help banks manage regulatory compliance.

Why banks are moving to cloud services

As most financial institutions (FIs) move towards a digital-centric model, where digital is at the heart of their consumer offerings, cloud data storage is making more and more business sense. However, there are also more specific benefits.

“The demand for data storage and retrieval is higher, and the cloud offers the flexibility to spin up data stores much faster than on-premises data centers, which traditionally have a longer lead time. Additionally, cloud providers offer cloud-native applications and services to manage data efficiently and implement cloud-native data governance and security tools to monitor your cloud data loads,” says Gaurav. Deep Singh Johar, member of ISACA. Emerging Trends Working Group.

Additionally, data backup and recovery can be performed faster if a well-designed data redundancy strategy is implemented in the cloud.

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What to migrate to the cloud and what to keep on-premises

What is clear is that most FIs are adopting some sort of hybrid model, which keeps some data on-premises and some in the cloud. “JP Morgan Chase has a hybrid, multi-cloud strategy, which includes multiple public cloud providers as well as a private cloud that we have built in-house,” confirms a bank spokesperson.

As for what to keep where, “there are several factors that financial institutions should explore when considering moving to the cloud,” says Johar. Among them, they should assess the sensitivity of the data that would be hosted in the cloud; whether the applications are accessible on the Internet; ease of scalability to the cloud; legacy architecture versus cloud-ready architecture; source code availability; vendor support available in the cloud; performance and latency factors; data residency requirements; downstream and upstream impact; future cloud support; and their roadmap for the app, according to Johar.

What FIs can do in the cloud that they can’t with on-premises data centers

“Our hybrid multicloud strategy has helped us improve the accessibility and scalability of our data, reduce hardware costs, and facilitate automated technology updates so teams can focus on innovation rather than innovation. manual deployment of system updates,” the JP Morgan spokesperson said.

“With cloud offerings, you can launch virtual desktop-based applications that provide connectivity from anywhere and anywhere. This removes the constraint of working from the local network and provides more flexibility for employees to operate remotely, including their mobile devices,” adds Johar.

In addition to high-performance computing, “artificial intelligence and machine learning, data storage and other areas can be different capabilities that help digitally transform previously manual or on-premises processes such as cloud security, IT auditing, cost and usage reporting, compliance analytics, template-based services for better customer experience, and document processing services,” said Tracy Woo, senior analyst at Forrester Research.

MORE FROM BIZTECH: Learn how the speed of the cloud can help banks identify and prevent fraud.

What the future of cloud storage looks like for financial institutions

“Our end goal is to have public and private cloud adoption on an equal footing,” the JP Morgan spokesperson said. Forrester’s Woo says the major issue will be interoperability. “Hyperscalers have experienced several major outages in the past year, which has made customers reluctant to place all their data with a single vendor. With each outage, the conversation is revisited. Topics such as data redundancy, backup and disaster recovery are all covered, storing these on alternate clouds, and similarly storing portions of data or copies of data on different clouds.

To learn more about what credit unions need to know about the cloud, click here.