Why Banks should strongly consider moving to cloud with COVID-19 situation
Managing the operations at Banks during COVID-19 pandemic puts cloud at the top priority due to the challenges of managing the IT infrastructure where most of the projects are on hold. However, some banks are experiencing the real benefit of migrating to cloud where they now face the “what if’’ scenario made real which appreciates the decision taken on moving to the cloud ( Specially Multi / Hybrid cloud ) where they can scale & manage the infrastructure within a couple of minutes compared to a traditional setup.
It’s very clear that Cloud is the main pillar to sustain with the current challenges as well as continue the Digital Transformation journey which is much needed than ever.
Oracle predicts that by 2025,
As Deloitte stated,
“Cloud is not the future or an emerging trend anymore: it is the present and it constitutes a critical tool for financial institutions to stay competitive in today’s challenging business environment.”
Cloud Environments
Source: Center for Internet Security
Due to security concerns and regulatory guidelines, Banks are always reluctant to move to public cloud. However to avoid these concerns as well as gain benefits of the clouds, most Banks have considered moving to a Hybrid cloud strategy — to maintain sensitive data in the Private cloud and move the less sensitive workload to the public cloud.
As highlighted below based on Redhat Global customer tech-outlook 2020, most organizations are moving towards Hybrid Cloud Strategy, where 31% of organizations have marked they are looking towards hybrid Cloud strategy according to the Global survey done by Redhat.
Cloud Strategy
“ The reasons they gave for having a hybrid cloud strategy were diverse but overall data security, cost benefits, and data integration led the pack.”
Cloud Strategies Based on Regions
On APAC region, 35% of organizations consider moving to Hybrid cloud strategy which is comparably higher than other regions.
With Covid-19 Situation, the trends and strategies have become a reality where banks are highly impacted and facing critical times to cope-up with the business operation which is more challenging than ever before.
Hence it’s the best time to move to the cloud and here are the top 5 reasons why banks should strongly consider it with this crisis.
Top 5 reasons why banks should strongly consider it with this crisis.
1. Cost Savings
High-Cost Spending with traditional Hardware Purchases
Traditional banks’ IT infrastructure is highly capital-intensive and incur a high cost with overall resource management including technical expertise and utilities. As innovative projects arise with the digital transformation initiatives, Banks are always forced to upgrade the infrastructure which is very expensive mainly with the purchasing of dedicated hardware and management of them.
Avoid Capex and move to Pay-As-You-Go Model
The key benefit of the cloud is that Banks can save a huge cost with the subscription model & pay-as-you-go model with the cloud where the pricing is based on the usage of the infrastructure. This strategy converts the high Capex Cost to Opex which is essential in this situation.
Saving Maintenance Cost
Banks always highly spend on maintenance of the current infrastructure with a hardware maintenance fee and technical expertise with recruiting & retaining engineers. Cloud will always reduce operational costs with remote management capability and automation.
With the COVID-19 situation all Banks are looking to drive down the cost and therefore based on the above facts it’s clear that this is the right time to strongly consider moving to cloud with the right cloud strategy ( Hybrid / Multi-Cloud ) where it will save a considerable amount of overall expenditure on the bank.
2. Faster Go To Market — Gain More Competitive Edge
Bottleneck for innovation is always with Traditional Hardware Setup.
The rise of Digital Transformation and the high competition with Fintecs has put pressure on banks to introduce innovative solutions to sustain and bring the best experience to retain customers. However with the legacy systems that run on Banks slower the entire process which does not provide the appropriate level of agility to keep up with the pace of change.
Setting up the Infrastructure requirements for these innovative applications has always been a challenge and the bottleneck where it takes at least 2–3 months for the readiness of Hardware.
Based on the RedHat insights as follows, most companies focus on innovation. Hence to cope up with the competition and sustain Banks must avoid this bottleneck for the innovation.
Cloud will save 50% of the time on Infrastructure setup and hassle-free deployment
With Cloud, Banks’ IT team can deploy the same application within just a few hours which saves 50% of the time on traditional infrastructure set up. This reveals the clear benefit that Cloud brings to quickly respond to changing market needs and bring a competitive edge to the Banks.
3. Faster Adaptation for New Technologies
Most Banks are aggressively pushing on the mobile-First strategy and already in the process of implementing Big Data and AI platform integration to bring more competitive advantage as well as provide the superior customer experience.
AI/ML has leaped to the front of the line when our customers choose to implement emerging tech workloads. 30% plan to be using AI/ML over the next 12 months if they aren’t already doing so. ( Redhat, 2020 ).
Without Cloud Banks need to spend Millions of Dollars to upgrade the infrastructure and gain the compatibility to adapt to new technologies especially with Big Data and AI.
As James Kobielus mentioned in the latest article,
“In 2020, every hybrid-cloud solution provider will publish MLPerf benchmark results that support their claims that their solutions can process specific AI training workloads better than those same workloads running on any of several rival on-premises platforms. ”
The combination of big data and potentially unlimited computing power will allow banks to develop systems capable of providing better insight into clients and make better decisions on their behalf. Services could become more customized. Because technology and business operations can be much more closely aligned, the cloud gives banks a golden opportunity to drive out the complexity of traditional infrastructure as well as legacy systems.
4. Reduce Risks
Banks run the most mission-critical, revenue impacting platforms that need the 100% uptime. Hence Banks spend a lot of money on maintenance to avoid any risk. With the cloud, Banks can reduce these risks especially related to resilience, redundancy and capacity.
Cloud Platforms are capable of immediate detection of different threats and vulnerabilities. As the cloud has the capability to perform millions of transactions and is resilient to high performance, banks can now easily avoid these risks as well as run critical platforms like money laundering and fraud detection which are challenging and too risky to run on traditional infrastructure.
5. Promotes Collaboration & Mobility
With the high availability and low risk, Cloud-based workflow enhances the ability to work together as a team more easily and efficiently than ever before. Furthermore, it’s the new normal with the COVID-19 situation where IT Teams, Business staff require real-time updates remotely, check what other team members are doing and communicate effectively.
The following HBR research also highlights that collaboration is the key ingredient in the organization culture to improve the digital transformation journey and cloud will fuel the collaboration environment more than just the traditional infrastructure As a Bank moving from a traditional environment to inculcate digitalization, the cloud would be first and the main step.
Therefore it’s clear that crisis created with the COVID-19 has emphasized that the cloud is the best strategy for Banks to sustain and get through this situation as it brings the following survival benefits;
- Huge Cost Savings
- Faster Go To Market — Gain More Competitive Edge
- Faster Adaptation for New Technologies
- Reduce Risks
- Promotes Collaboration & Mobility
Furthermore, please feel free to talk to me if you need further details about the right strategy to move to the cloud and if there are any current challenges that you are facing.
Cheers ! Stay Safe :)
Make Hybrid Cloud Work for Your Business
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