What’s Driving Financial Institutions to Move to Cloud?

Banking, Financial Services and Insurance (BFSI) institutions are in an increasingly competitive space as the rise of financial technology, and the plethora of new digital services available to consumers have transformed the sector.

In an increasingly deregulated environment, traditional financial institutions compete with more aggressive Fintech entrants that focus on a niche customer segment or service. Digital “one-stop-shop” banks can be set up much more quickly than ever before and don’t carry the long tail of legacy technology that can slowly change.

In the face of this unprecedented operating environment, banks must rapidly modernise to meet “tech-savvy” consumer expectations for a compelling and differentiated user experience and leverage their brand strength and large customer base to carve out a leadership position in the new world.

However, they must do this against a backdrop of limited technical resources, evolving regulations and escalating security threats. This is a tall order and one which requires clear decision-making and specialist help.

Digital Banking Transformation

The pandemic has accelerated the need for BFSIs to deliver digital banking services with an increasing demand for quick contactless payments. Core banking services have evolved from batch processing to one that can embrace the agility and scalability of cloud by leveraging a microservices-based architecture. And this has catalysed digital banking transformation. Many financial institutions have or are developing a cloud strategy, if not already leveraging it. However, some banks and financial institutions are still hesitant to migrate to cloud.

So, why are Banks and Financial Institutions still hesitant to move to cloud?

Security

A key concern that makes financial institutions think twice before moving to cloud is security - predominantly around third-party data storage. With strict regulatory and compliance standards, BFSIs are concerned about their data sovereignty and the fear of a security breach.

Monetary concerns

Migrating to cloud requires immediate investments. While it will deliver results over time and the benefits will outweigh the costs eventually, the move can be expensive, time-consuming, and need specific skills and capabilities that the institution might not have presently.

Regulatory Compliance

The financial industry is one of the world’s most regulated ones, and all operators in this field must comply with the local and international compliance and regulatory laws. Though most of the regulatory bodies have issued guidelines for cloud adoption, the institutions need the capabilities to ensure compliance on a regular and real-time basis to mitigate the risks associated with it.

While many banks were still hesitant to move to cloud till a couple of years back, owing to the above concerns, the pandemic has wholly altered their approach toward the technology. As a result, cloud technology and the agility it provides have become crucial to thriving in the changing business landscape of the banking and fintech industry.

Cloud Adoption & IT Modernisation

Gone is the time when IT companies just meant Microsoft®, IBM®, or even Google™. All successful organisations, including financial institutions, are fast becoming IT companies. IT is no longer a support function but has a crucial role to play in the achievement of business goals for BFSIs.

Now is the perfect time for banks and financial institutions to accelerate their cloud adoption strategy. Here are some reasons they should be planning to migrate to cloud if they don’t already have a plan.

Better Flexibility and Scalability

With cloud, you can leverage plug-and-play solutions that enable faster deployment of services through PaaS and SaaS cloud services. It also provides you the flexibility and scalability to accommodate the increasing user or transaction base while delivering exceptional performance.

Without cloud systems, an unexpected transaction surge usually means additional procurement and unattractive downtime until more capacity is built – which means performance issues and unpleasant experiences for the client. Cloud’s scalability on-demand means accommodating the fluctuating demands in real-time and no locked-in investments as you pay only for what you use.

Cost Savings

Migrating to cloud is a wise investment for financial institutions when considering future operational cost savings. With cloud, you pay for the capacity used, which means no unused storage, as is often the case with on-prem infrastructure. You can also avoid costs associated with upgrading on-premises capabilities that are extremely expensive and unfeasible.

Enhanced Customer Experience

Cloud enables financial institutions to accelerate innovations to adapt to the changing technological landscape by developing more innovative products and services on the go. As a result, you can establish robust financial operations in cloud and gain an edge over your competition by offering state-of-the-art innovative financial solutions that cater to changing customer demands.

Increased Security

Contrary to popular belief, cloud services are often more secure than physical servers. This is because cloud solution providers are well-versed with cybersecurity risks and can offer a higher security standard that your IT team or an on-prem system is unlikely to achieve. In addition, modern security tools like multi-factor authentication and security certificates ensure your data is safe and secure irrespective of the number of transactions.

Charting Your Cloud Migration Journey

Now that we’ve discussed why you must move to cloud, how do you get started on your cloud journey? Each organisation’s operations are unique, and you need a cloud migration plan suited for your business objectives. Rackspace Technology® and Amazon Web Services (AWS) have put together this ebook to help you strategise for a holistic cloud journey, highlighting three areas BFSIs should focus on.

Read all about it: Charting Your Cloud Migration for Financial Services

Refine and optimise your financial operation practices with Rackspace Technology’s FinOps Core Accelerator. Our FinOps Core Accelerator is a four-month, highly consultative, sprint-style engagement designed to refine and optimise your. We provide cloud financial analysts who will assess and optimise your internal FinOps capabilities while providing high-impact, near-term recommendations for optimal cost savings.

Solving Together™

Rackspace Technology brings experience and expertise to running compliant and performance-sensitive workloads for financial organisations.

Rackspace Technology delivers exceptional service and support built on these strengths:

• Nearly 5,000 industry certifications across 45 technologies
• Global data center footprint in major cities across five continents
• Big data support spans AWS, Microsoft Azure® and Hortonworks® HDP
• Unrivaled portfolio across apps, data, security and infrastructure
• Independent security audits and certifications (e.g., ISO, SOC, PCI, FISMA)
• 100% Network Uptime Guarantee
• 24x7x365 support from certified experts
• Industry-leading SLAs and customer satisfaction scores
• Pay-as-you-go pricing with flexible contracting

We elevate your cloud infrastructure so you can get an edge on the competition. Learn more about how we’ve helped other organisations across the globe.