The new era of distributed cloud computing

By Theodora Lau and Bradley Leimer of Unconventional Ventures?

The ways that financial services firms leverage technology have always been a source of constant change. From the components of core systems and client facing applications to the underpinning platforms mitigating risk and ensuring compliance to the critical functions of the back office, the financial system remains one of the most robust users and purveyors of the latest technology. But has the adoption and deployment of new technologies been swift enough to counter changes within the industry and ecosystem itself???

Over the past decade, financial technology startups have rapidly adopted cloud-based technology and driven more nimble development as they started to nibble away market share in nearly every corner of the banking business model. And through the course of this global pandemic, the ongoing shift toward digital operations has only increased the complexities required for technology teams to keep up — especially in heavily regulated industries such as banking and healthcare. As incumbents shift more of their operations toward the cloud and toward more flexible data arrangements, they have seen new capabilities and partnerships open up more business value and more pertinent value propositions for their customers.?

Despite this enthusiasm, however, only 20 percent of operational workloads have made their way to the public cloud, according to a paper from the IBM Institute for Business Value. While these implementations have validated the opportunities for moving more workflows to the cloud, they represent mostly low-hanging fruit, as the majority of mission-critical workloads are still mostly on premise.

The challenges are multifold:

• Data gravity and latency. The sheer volume of data and the complexity of migrating both applications and data can present formidable operational challenges. As for edge computing use cases — such as connected cars that rely on data being nearby for faster processing — having the cloud situated far away will impact performance as well.
• Security. With workloads spanning across multiple locations, multiple technology environments, and across multiple partners, managing a consistent set of security and compliance controls can be difficult.???
• Operational visibility. With teams running 5 to 8 cloud environments (along with others that are on premise), not only can cloud sprawling result in fragmented visibility of the organization’s digital platform and apps across architectures, it can also increase complexity and impact development agility.?
• Compliance and regulation. Data sovereignty and residency laws that require sensitive data to stay onshore can become challenging and costly for organizations that wish to pursue a centralized cloud solution.

Ushering in a new era of financial services with next generation hybrid cloud

To realize the true benefits of cloud and to propel new robust partnerships alongside innovative new products, a new approach is needed — one that can be deployed securely across on-premises, through edge computing, and within public cloud environments sourced from any cloud vendor.?

Welcome to the next generation hybrid cloud that brings the cloud to you, where the data resides; a distributed cloud solution that meets you where you are with existing infrastructure, integrated appliances, or your public cloud accounts, along with controls that are optimized for heavily regulated industries.?

Global research and advisory firm Gartner delineates this next generation distributed cloud as “the distribution of public cloud services to different physical locations, while the operation, governance, updates and evolution of the services are the responsibility of the originating public cloud provider”.

One great example of this distributed cloud is IBM Cloud Satellite, which extends a wide range of Platform as a Service (PaaS) into their client’s environment, so they are co-located with their data. There is no need to transfer data in order to do analytics, because with Satellite, the AI, IoT, & analytical services are deployed to where the data resides. This drastically reduces network latency. And these same IBM PaaS services can be deployed quickly and simultaneously across all environments, even those of other cloud vendors, which means organizations will have consistent security policies and consistent dev tools across any number of locations. This speeds up development and ensures compliance across the enterprise.

Consider the following scenarios.??

[1] Mergers and acquisitions. 2021 has been a record-breaking year for mergers and acquisitions. To truly realize the investment, however, we must simplify Day 2 operations post merger to allow the teams to continue to operate while ensuring a single view of infrastructure and operations. This is especially important given the complexities of combining data and operations across geographies and infrastructures.?

The next generation of hybrid cloud will allow organizations to manage their transition dynamically and overcome the constraints of legacy systems and silos, while ensuring consistency and compliance across branch locations and back office operations. And with a solution like Satellite, service operational management (such as security patches, various upgrades, etc.) is handled by IBM, and visibility is aggregated to one common dashboard that makes navigating these transactions a bit more straightforward for your technology teams.

[2] New business expansion. Businesses looking to expand into new partnerships and geographies require a thorough assessment of infrastructure and operations strategies, from data centers to support staff, to ensure efficiency, security, and compliance. To open up to new partnerships and business models, financial institutions must also have a well thought out data strategy to enable them to leverage data secured within their own environments with outside partners.?

New levels of data interoperability and portability provided by the hybrid cloud will negate the need for organizations to be locked in to either one cloud environment or vendor, enabling them to run the workloads where it makes the most sense, while maintaining security, auditability, and compliance requirements.?

[3] AI models anywhere. According to Gartner , edge computing and processing will grow by 75% by 2025. And “Digital First, Remote First” will be the central theme for the future of financial services. As connected cars meet new payments technology and transform into smartphones on wheels, new partnerships between automotive manufacturers, fintechs or financial institutions, and technology companies will form. New revenue streams will develop, along with new customer experience. We must change the way we architect to empower new solutions, enable faster data processing, and meet new customer expectations.?

From CaixaBank and PNC to ABN AMRO and Regions Bank , financial institutions have shown a great deal of interest in deploying cloud architectures to support new capabilities. To learn more about the kind of solutions IBM Cloud Satellite can enable, try this interactive tour . For a broader view of hybrid cloud solutions across regulated industries, we suggest you sample these videos of technologists, startups, and enterprises from the recent Cloud without Compromise event.

Now is the time for the industry to take a leap forward, and embark on a true digital transformation journey to the distributed, hybrid cloud of the future.

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This article was sponsored by IBM. Learn more about IBM Financial Cloud Services here .?

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