Many banks and financial institutions have dipped a toe in the cloud, and most are beginning to understand the benefits it can bring them on an institutional level. As we approach 2023, the shift to the cloud is changing from a nice-to-have to an imperative.
McKinsey analysis has found Fortune 500 institutions can generate as much as $80 billion in EBITDA by 2030 in a switch to the cloud. Optimisation on the cloud provides impressive cost savings and streamlining of an organisation. Banks migrating workloads can develop and launch multiple new products at speed and scale.
While banks’ legacy IT landscapes are varied and often complex, those at the top have made cloud transformation a primary goal. 82% of banking leaders plan to move more than half of their mainframe workloads to the cloud. A majority of these, according to Accenture, plan to do so by the end of 2027.
Banks realise they must deliver an optimised customer experience across digital and mobile applications. Their end users operate in an always-on world, and products must be ready and relevant quickly. The cloud enables this, as well as tools available to power the next generation of banking.
Return on investment
Financial institutions looking to accelerate their cloud migration must consider it a journey, not an end goal. Organisations should focus not on immediate quick wins but on the overall value increases for their customers. Cloud has moved beyond an IT project into something that requires backing and buy-in from across the business.
C-level executives are already seeing the benefits of this new way of thinking. 62% expect a return on investment from migration greater than 10%, while 77% predict a recovery of their mainframe migration costs within 18 months.
The public cloud is becoming a go-to option for IT transformation at banks. 63% aim to move their workloads to a public environment. Technology providers like Pismo enable a composable approach to this change.
Financial institutions can run a public cloud-based platform alongside legacy systems without prohibitive costs. They can migrate a few accounts and test the system before committing to a complete transfer.
Pismo has developed a tool kit to help banks move account data to our cloud-native platform using our APIs or data files. It means our clients have total visibility and control over transferred data and other details during this process.
Security concerns once dominated why executives reconsidered a move to the cloud. This has changed. An IBM survey discovered that banks experienced improved security when migrating. Using multiple data centres with multi-region architecture provides a strong line of defence against risks.
Public cloud providers live and die by their security credentials. Prominent vendors make significant investments to ensure downtime and disruption are minimal. The risk of systems failure is often lower than the banks’ internal infrastructure.
Amazon Web Services (AWS), for example, offers several security services. These manage access, analyse data for irregular activity with machine learning capabilities, mitigate DDoS attacks, encrypt data, and send alerts whenever changes are made to AWS resources.
The agile infrastructure a cloud system provides is also an effective tool in maintaining uptime and reducing risk. Containerisation – in which microservices and software shift between computing environments – is a technological advantage that enables banks to move quickly. Identifying bugs, defects, or programs can be achieved in isolation while primary services remain running. This prevents downtime, which is damaging both reputationally and financially.
Want to know more about how the public cloud can power your next-generation transformation? Get in touch with us today.