By Paul Mercina, Director of Product Management, ParkPlace Technologies
More than ever, it is imperative for financial services organisations to migrate to the cloud. New demands from customers, along with increasing regulatory requirements, require organisations to have an IT ecosystem that can deliver increased agility, innovation and customisation.
Yet, despite recognising the multiple benefits of cloud-based IT, many financial services organisations have been hesitant to make the leap, primarily because of security, data privacy and compliance concerns. The process of migrating IT systems to the cloud — while simultaneously ensuring ‘business as usual’ for staff and customers — is not without its challenges. Here are seven areas to consider that will allow financial organisations to best reap the rewards, while making the process as efficient and straightforward as possible.
Strategy before action
Moving all your IT systems to the cloud may be appealing, but in practice, this is unrealistic. Not everything can or should be moved. Many applications and services are still not optimised for virtual environments, let alone the cloud. You will also need to consider the order of migration and impact on operations and staff. Considering your unique needs is critical to unlocking the benefits of the cloud without compromising security, daily activities, existing legacy systems or wasting budget.
Interim planning is critical
The long-term plan may be to move 80% of your applications and data storage to the cloud; however, in the short term, you will need to consider how you will maintain accessibility and security of existing data, hardware and applications during the migration. Third party suppliers can help maintain legacy systems and hardware during the transition to ease disruption and ensure continuity of services.
Careful disposal of legacy hardware
Cloud migration will inevitably involve the retirement of some hardware. It’s imperative to ensure any stored data is secured to avoid the risk of data breaches. Many organisations underestimate hard drive related security risks or assume incorrectly that routine software management methods provide adequate protection. This is critical for financial services companies whose reputation relies on security and data protection.
Standing side-by-side with the previous point, information security remains the number one concern for the financial services industry. When correctly deployed, cloud applications are no less secure than traditional in-house deployments. What’s more, the flexibility to scale in a cloud environment can empower organisations with more control over security issues.
Agile innovation and competitive edge
Accessing the cloud can increase a bank’s ability to innovate by enhancing agility, efficiency and productivity. Gaining agility with faster onboarding of services (from the traditional two-to-three weeks to implement a service to almost instantly in the cloud) gives financial services companies a competitive edge: they can launch new services to the market quicker and with security confidence. Additionally, the scaling up (or down) of services is fast and reliable, which can help to reallocate resources away from the administration of IT infrastructure, and towards innovation and fast delivery of products and services to markets.
As organisations move from on-prem to cloud environments, costs shift from capex to opex. The cost savings of public cloud solutions are significant, especially given the reduction in initial capex requirements for traditional IT infrastructure. During periods of volumetric traffic, the cloud can allow banks to manage computing capacity more efficiently. And when the cloud is adopted for risk mitigation and innovation purposes, cost benefits arise from the resultant improvements in business efficiency. According to KPMG, shifting back-office functions to the cloud allows banks to achieve savings of between 30 and 40 percent.
Short-term pain for long-term gain
Although any large-scale IT transformation will undoubtedly cause some disruption, for those financial services organisations looking to make the move, a sound migration strategy will be vital to success. While some organisations are understandably hesitant about the impact of cloud migration in terms of operational disruption and costs, it’s worth remembering that, in the long-term, moving to the cloud will allow all financial services organisations to unlock the potential of a more flexible, scalable and resilient IT system so they can focus on delivering improved services and increasing innovation.