The financial services industry is ever-changing. Many of its members must balance extensive demands — from the pressures to continuously innovate, respond to unexpected surges in customer demand, and extend services to new regions — all while managing risk and combating fraud.
The biggest trend disrupting financial services is of course digitalization. Lots of consumers have abandoned in-person banking globally, with more than 70% banking digitally every week. Traditional financial services firms have realized that to provide a holistic customer experience of the highest quality, they need to adopt new, emerging, and agile technologies. Furthermore, companies are pressured to automate manual processes, develop more and better digital products, and deliver better services overall.
Luckily, the right kind of infrastructure and technology partnerships can help to solve existing challenges and accelerate future transformation. Read on to learn more about the challenges the financial industry currently faces and how a multicloud strategy can help solve them.
Taking Stock: Challenges Facing the Financial Industry
Financial services is one of the most heavily regulated industries. The number of regulatory changes that banks must track on a global scale has more than tripled since 2011, growing to an average of 200 revisions per day. Complicating matters further, many financial services firms oversee portfolios of services that include legacy apps that have been in use for many years. These apps often cannot support newer capabilities to accommodate mobile application support, business intelligence, and other services. They suffer from shortcomings that adversely affect their resiliency, such as outdated and manual processes for updates and security processes.
These legacy applications also have high vendor lock-in because they lack modern functionality and portability. Furthermore, they lack the capability to protect against financial crime — with big banks spending over $1 billion per year maintaining legacy infrastructure and seeing a rise in false-positive rates as financial crime evolves in sophistication.
How Can a Multicloud Strategy Help?
To meet the demands of modernization, competition, and compliance, financial services organizations are adopting public cloud, hybrid cloud, and multicloud strategies. A hybrid cloud model enables existing applications to be extended by connecting to the public cloud. This infrastructure framework showcases the benefits of the public cloud — such as scale and speed — without organizations needing to rearchitect entire applications. This approach provides organizations the flexibility to decide what parts of an application should reside in an existing data center versus in the public cloud, providing them with a consistent and flexible approach to developing a modernization strategy.
A well-defined and implemented multicloud strategy can mitigate cloud-computing risks, as recently described by the internationally renowned bank, Banco Bilbao Vizcaya Argentaria (BBVA).
According to their findings, the cloud could help banks become more agile when developing new products and services. For example, project teams would have less need to negotiate for resources with internal stakeholders and obtain sign-offs because of the flexibility and scalability of the cloud (infrastructure elasticity) and the more minor limitations from legacy technologies.
A scenario demonstrating the value of multicloud is deploying a solution on multiple clouds simultaneously and dynamically moving workloads based on cost and user experience.
Another example is leveraging the power of BigQuery and the set of tools for data analytics by GCP; the well-known capabilities of BigQuery for analytics are remarkable, making this the preferable choice for data engineers. So it is prevalent to find solutions where the operating system might be running on AWS and the analytical part on GCP. This is the type of flexibility and agility that multicloud promises.
Business Benefits of Deploying Multicloud in Financial Services
While the financial services industry has been somewhat cautious in adopting external cloud services, 85% of all enterprises now use over one cloud service. In contrast, only 9% use a single public cloud, and another 5% use a single private cloud.
Adopting a multicloud strategy can provide financial organizations many benefits, some of which include:
- Cheaper innovation: If a financial organization’s multicloud strategy includes public cloud services, these technologies can provide the high performance and reliability that financial organizations require without building systems from scratch.
- Cost-effectiveness: In many cases, private clouds can provide a lower total cost of ownership (TCO) than public clouds, depending on certain variables. A multicloud strategy enables financial organizations to optimize their private cloud services and public cloud services to minimize costs and lock-in risks.
- Scalability: Private and public cloud resources are characterized by auto-scaling and constant optimization. Both private and public cloud resources can be scaled up or down as needed, on-demand.
- Enhanced regulatory compliance: Instead of a patchwork of security and GRC solutions, an effective multicloud strategy establishes a common compliance framework across multiple clouds. This is true for both government-mandated compliance as well as internal policy adherence.
Collaborate With Wizeline to Make Multicloud a Reality
In summary, competitive threats, regulation pressures, and other forces are driving digital transformation in the financial services industry. Innovation is a prerequisite for long-term success. To start the journey to multi-cloud and the agility it offers, we recommend working with a knowledgeable and certified cloud partner to cut out the guesswork and reduce the time it takes to implement the right solutions.
Wizeline specializes in offering financial services technology services, taking a vendor-agnostic approach to cloud solutions and providing custom cloud strategies for each client’s business and technology needs. We partner with the three industry-leading cloud providers — Amazon Web Services, Google Cloud, and Microsoft Azure — to ensure we have the necessary resources and expertise to make every engagement successful.