Next-Generation Cloud Infrastructure for Financial Services

Over the last decade, cloud computing has transformed many aspects of how we do business, and nowhere is this more true than in banking and financial services.

However, the transition certainly hasn’t been without its challenges, and not every migration to the cloud has been completely successful. With the benefit of hindsight, we can clearly see where missteps and failings occurred in order to better understand how to adapt for the future.

Increasingly, organizations in the financial sector are looking towards hybrid-cloud and multi-cloud solutions in order to overcome some of the obstacles endemic to a public-cloud-only approach. Many of these obstacles have particular relevance to the sector. For example, compliance and regulatory requirements create a particular burden for companies working with commercially and personally sensitive data. Creating applications that leverage the scalability and flexibility of hybrid solutions will play a key role in solving these problems over the next five years.

To understand why getting platforming right within this timeframe will be crucial - both for businesses that are looking to scale as well as those whose priority is customer retention in the face of challengers and disruptors - I spoke to Dell’s EMEA CTO, Marc O’Regan, as well as Intel’s worldwide CTO for financial services, Bruno Domingues.

?Technology is clearly the driver behind much of the change that is taking place across the industry. It’s been reported that 88% of financial institutions are expecting to lose business to “disruptor” fintech companies in the next five years. Agile and digital-native, these are companies that exist to leverage a specific technological innovation to drive growth, often through making efficiencies that reduce cost or friction for the customer. During the same period, 77% of large financial institutions plan to increase their own focus on customer-facing tech innovation. Rather than growth, their north star is customer retention.

Cloud platforming can create a level playing field between the snappiest of up-and-coming hotshots and the grandest of incumbents. The differentiator is often data – while disruptors will look to leverage external and less-regulated data to create services and algorithms, incumbents have vast swathes of existing customer and legacy data that endows a heavier burden. This is the cause of failed cloud initiatives throughout the sector, O’Regan tells me.

He says “We’ve seen a lot of workloads in the financial industry move onto public cloud platforms – and then go through a series of repatriations back to on-premises – for a variety of reasons.”

High among them is undoubtedly the fact that global institutions have to deal with compliance and regulation across many jurisdictions, often with vastly different requirements.

Domingues tells me, "The major challenge is that cloud promises this immutable infrastructure … cloud brings this homogenous architecture and financial institutions often can’t take advantage of this and at the same time be compliant. What you can do, for example, in the UK you might not be able to do for Malaysia. Many banks have this global footprint, and this is the major challenge that they have."

When mistakes happen and, as observed above, solutions need to be taken down from the cloud and returned on-premise, this can be hugely costly. Over the last 10 years, the quest for cost-efficiency has been a huge driver of cloud adoption – which may itself have been a mistake, Domingues adds.

“Now, financial institutions’ cloud adoption isn’t because they know it’s cheaper – they [adopt cloud because] they want to focus more on the application, not to be in the data center business. They shift in order to get more agility, rather than cost-saving."

This brings us to today – and the growing movement towards hybrid and multi-cloud solutions. Aside from issues of regulation and compliance, there are other reasons that public cloud platforms might not be ideal for every financial services workload. For example, latency and bandwidth issues can mean it’s more effective to keep your fastest-moving and most highly accessed data closer to hand. And the arrival of edge computing will mean more decisions have to be taken about what data is sent off-premises and what remains in-house. Multi-cloud (stacking services across different cloud providers) and hybrid-cloud (where resources can be accessed via a common toolset whether they are on or off-site) – create flexible environments where payloads and workloads can be distributed according to their specific requirements.

O’Regan tells me, "Probably the biggest [issue] I'm hearing from banks is sovereignty and ownership and control of data. I see a lot of banks and insurers looking at how they can exploit the functions of public cloud platforms and the underlay of private cloud platforms – and extend that to the edge platforms in the future – but maintain control of their data. It's really about understanding your data posture, where your data lies, and then being able to tap into the right resources, on-premise or off-premise.”

It’s very apparent that cloud, having been around for at least a decade, is a very different proposition than it was ten or more years ago. Particularly for organizations dealing with large and complex datasets, there are a lot more choices that need to be made. Decisions here can have a big impact not just on spending but also on an organization's capability to be agile and innovate.

Multi and hybrid-cloud ecosystems bring their own set of challenges, of course. Different platforms and solutions use different pricing structures, which can make it difficult to forecast costs accurately. You also need to spend time making sure every element of your system can “play nice” with everything else, which requires technical and engineering time and resources.

Perhaps even more crucial is the ability to understand the requirements of all of your data and workloads at each stage of its lifecycle. Put very simply, you have to know you'll be using the right cloud at the right time. According to IDC research commissioned by Dell, workload placement strongly influences cost, efficiency, performance, and security of projects.

These issues are explored in more depth in a Dell whitepaper on Multi-Cloud Business Agility & IT Automation which can be read here . Additionally, you can click here to listen to my entire conversation with Marc O’Regan and Bruno Domingues. In addition to the challenges and benefits of hybrid and multi-cloud within financial services, we cover best practice tips for those looking to make the transition from public cloud, and predictions for the future.?

If you would like to learn more about technology trends such as wearable tech, then you might like my book:?Tech Trends in Practice: The 25 Technologies That Are Driving The 4th Industrial Revolution .

Thank you for reading my post.?Here?at LinkedIn ?and at?Forbes ?I regularly write about management and technology trends. To read my future?posts simply?join my network here ?or click 'Follow'. Also feel free to connect with me via?Twitter ,??Facebook ,?Instagram ,?Slideshare ?or?YouTube .

About Bernard Marr

Bernard Marr ?is a world-renowned futurist, influencer and thought leader in the field of business and technology. He is the author of 18 best-selling books, writes a regular column for Forbes and advises and coaches many of the world’s best-known organisations. He has over 2 million social media followers and was ranked by LinkedIn as one of the top 5 business influencers in the world and the No 1 influencer in the UK.