Why The Financial Services Industry Needs To Rethink Its It By Embracing The Cloud

To be relevant in the future, financial institutions should partner with hyper-scale cloud providers and enablers like Nordcloud.

2018 has witnessed PR failures from some of the major global financial institutions in the UK after the breaching of certain regulatory compliance due to outdated technical architecture and processes which fail to manage risk within these businesses.

This is not only a huge reputation risk but also highlights the weak areas and slow pace of innovation at these big conglomerates.

At the same time, these financial institutions are taking a hit on their customer satisfaction and loyalty due to operational glitches/service non-availability. In an industry where the competition and cost of customer acquisition is fairly steep, this is an anti-pattern which should be avoided.

Regulators and banking associations have significantly improved their messaging. Instead of giving hints and tips, they are coming out in the open and offering solid guidelines & directives for the Financial Services Industry to think about the changing technology landscape, business dynamics (as new customer products & offerings emerge), and increased regulatory overhead which is mandatory to gauge the health of the FSI vertical.

How To Improve Operation Resilience For Financial Market Infrastructure

Recently, Prudential Regulatory Authority (PRA) and Bank Of England (BoE) published an article and also kicked off a joint discussion paper (DP) to improve operation resilience for financial market infrastructure in the light of recent incidents. Yet another great example of how regulators are trying to push the boundaries and asking these firms to think ahead and embrace new technology to solve business problem.

They laid down a few key concepts:

  • Business continuity planning (BCP) to manage operational resilience

BCP is key to operational resilience, a lot needs to be done (from procuring to testing to maintaining) to have a truly good BC plan. Buying upfront capacity and taking a hit on CapEx is an option but clearly losing out on the opportunity costs (what else can you do if not this?) and also not viable long-term strategy. Public cloud offers amazing business agility and with automation that can manage back-ups, auto-provisioning and disaster recovery across the globe they can significantly improve operational resilience at much lower costs and let you focus on what you’re best at.

  • Board approved tolerances and level of disruption

This again highlights the holes in the existing IT governance and how an exacerbated IT demands good governance. Cloud not only offers the right tools to give management level visibility and KPI tracking, it also enables smarter governance by automation & effective risk management through infrastructure as code and compliance as code. It’s important to re-organise, up-skill, and operate with a new governance model to set tolerances and manage them better.

  • Planning for failures

This is a great point. Financial institutions often plan for service operations and not really for failures. This requires significant scaling capabilities along with full infrastructure for IT teams to perform a series of non-functional tests before they can ship their products to the market. Cloud is perfectly suited to offer the on-demand scalability along with tools that boost staff productivity and improve code quality through DevOps process improvement.

Public Cloud Providers Can Solve Operational, Technology and Security Issues

We think it’s a great start and a perfect way to start discussions within the FSI and to help them re-focus on operational challenges. More importantly, it will help with what they want to do today, tomorrow and next year to make them profitable.

It’s clear that financial institutions are great at creating financial products and public cloud providers are great at solving operational, technology, security issues as they have the skills and the resources to do so. It’s important that financial institutions start off-loading these non-core functions and look for partnerships or create joint ventures with hyper-scale cloud providers and enablers like Nordcloud to be relevant in the future.

Cloud Computing Is On The Rise In The Financial Services – Are You Ready?

Download our free white paper Compliance in the cloud: How to embrace the cloud with confidence, where we outline some of the many benefits that the cloud can offer, such as:

  • Lowered costs
  • Scalability and agility
  • Better customer insights
  • Tighter security

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    Why the Financial Services Industry needs to rethink its IT by embracing the cloud

    CATEGORIES

    Blog

    2018 has witnessed PR failures from some of the major global financial institutions in the UK after the breaching of certain regulatory compliance due to outdated technical architecture and processes which fail to manage risk within these businesses.

    This is not only a huge reputation risk but also highlights the weak areas and slow pace of innovation at these big conglomerates.

    At the same time, these financial institutions are taking a hit on their customer satisfaction and loyalty due to operational glitches/service non-availability. In an industry where the competition and cost of customer acquisition is fairly steep, this is an anti-pattern which should be avoided.

    Regulators and banking associations have significantly improved their messaging. Instead of giving hints and tips, they are coming out in the open and offering solid guidelines & directives for the Financial Services Industry to think about the changing technology landscape, business dynamics (as new customer products & offerings emerge), and increased regulatory overhead which is mandatory to gauge the health of the FSI vertical.

     

    How to improve operation resilience for financial market infrastructure

    Recently, Prudential Regulatory Authority (PRA) and Bank Of England (BoE) published an article and also kicked off a joint discussion paper (DP) to improve operation resilience for financial market infrastructure in the light of recent incidents. Yet another great example of how regulators are trying to push the boundaries and asking these firms to think ahead and embrace new technology to solve business problem.

    They laid down a few key concepts:

    • Business continuity planning (BCP) to manage operational resilience

    BCP is key to operational resilience, a lot needs to be done (from procuring to testing to maintaining) to have a truly good BC plan. Buying upfront capacity and taking a hit on CapEx is an option but clearly losing out on the opportunity costs (what else can you do if not this?) and also not viable long-term strategy. Public cloud offers amazing business agility and with automation that can manage back-ups, auto-provisioning and disaster recovery across the globe they can significantly improve operational resilience at much lower costs and let you focus on what you’re best at.

    • Board approved tolerances and level of disruption

    This again highlights the holes in the existing IT governance and how an exacerbated IT demands good governance. Cloud not only offers the right tools to give management level visibility and KPI tracking, it also enables smarter governance by automation & effective risk management through infrastructure as code and compliance as code. It’s important to re-organise, up-skill, and operate with a new governance model to set tolerances and manage them better.

    • Planning for failures

    This is a great point. Financial institutions often plan for service operations and not really for failures. This requires significant scaling capabilities along with full infrastructure for IT teams to perform a series of non-functional tests before they can ship their products to the market. Cloud is perfectly suited to offer the on-demand scalability along with tools that boost staff productivity and improve code quality through DevOps process improvement.

     

    Public cloud providers can solve operational, technology and security issues

    We think it’s a great start and a perfect way to start discussions within the FSI and to help them re-focus on operational challenges. More importantly, it will help with what they want to do today, tomorrow and next year to make them profitable.

    It’s clear that financial institutions are great at creating financial products and public cloud providers are great at solving operational, technology, security issues as they have the skills and the resources to do so. It’s important that financial institutions start off-loading these non-core functions and look for partnerships or create joint ventures with hyper-scale cloud providers and enablers like Nordcloud to be relevant in the future.

     

    Cloud computing is on the rise in the financial services – are you ready?

    Download our free white paper Compliance in the cloud: How to embrace the cloud with confidence, where we outline some of the many benefits that the cloud can offer, such as:

    • Lowered costs
    • Scalability and agility
    • Better customer insights
    • Tighter security

    Download white paper

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      How to build a business case for the cloud in financial services

      CATEGORIES

      Blog

      The financial services sector is well known for its caution surrounding technological change, due to its history of regulations, legacy and money handling. However, with constant pressure on IT budgets and the need for digital innovation, financial services firms can no longer ignore the benefits the public cloud have to offer.

      In a recent survey, 74 percent of banks report that the cloud will become a major factor in the industry within the next five years. Why? Because the cloud offers the financial services a cheaper, more scalable and agile way to improve their business operations without having to compromise security or compliance.

      In this blog post, we’ll discuss the business case for moving your financial business to the cloud. Here are four benefits that may help solidify your decision to embrace digital transformation:

      1. Cost Reductions:

      In today’s unsteady economy, financial services are not just looking for ways to cope with cost pressures; they’re looking to invest in innovative technology to help them:

      • Compete with FinTech insurgents
      • Improve operational efficiency
      • Accelerate modelling and analysis
      • Serve customers better
      • Differentiate themselves in the market with innovative services

      It’s no secret that well-architected environments in the cloud are a cheaper alternative to co-location or on-premise solutions. In fact, 88 percent of financial institutions believe that the reduction in TCO (total cost of ownership) is the biggest benefit of a cloud-based infrastructure. By embracing the cloud, money that was once spent on capital infrastructure and keeping servers cool can instead be used to focus on operations and opportunities that matter to individual businesses and their customers.

       

      2. Integrated Security:

      Although traditional data centres offer businesses a physical sense of security, they aren’t always the best long-term or most economic solution. For financial services that are planning on scaling their business and using new, innovative technologies, moving some of your infrastructure to the cloud is almost inevitable.

      It’s important to note that this move does not make your data less secure. Despite the security myth surrounding cloud technology, your sensitive information will remain safe on the cloud, providing your financial business has a clear and strictly implemented security policy. Your level of security also depends on your cloud service provider.

      Here are some examples of security features your provider can offer:

      • Access control that allows you to choose who in your business can, or cannot, access sensitive data. For instance, Azure Active Directory helps ensure that only authorised individuals can access your applications, environments and data.
      • Behaviour analytics that can detect threats and anomalies and report any unusual behaviour or unauthorised access.
      • Integrated security across all of your business’ applications, meaning that employees are safe to work from anywhere.
      • Continuous monitoring of your servers, applications and networks to detect threats. Businesses also have the option to deploy third-party security solutions within their cloud environment, such as firewalls and anti-malware.
      • Physical security. For example, Azure’s regional data centres include fencing, CCTV and security teams.
      • Shared security with your cloud service provider. In order to keep your data as secure as possible, your business needs to take responsibility for your own security practices, in regards to your applications and employees.

      3. Quick & Economic Scalability:

      Growth is important to all businesses, particularly when you’re handling new customers and data on a daily basis. With the cloud, companies can scale and deploy releases quickly and continuously (either automatically or manually) according to demand, or reduce resources if needed. This means that you only need to pay for the platforms that you actively use across your business or IT infrastructure.

      For example, an insurance firm may need to run complex risk models to respond to market changes. Doing these calculations in the cloud lets them access hundreds or even thousands of processors to complete the modelling quickly. Yet, this performance isn’t required all the time so delivering this kind of high-performance computing cluster in-house is prohibitively expensive.

      4. Big Data, automation, and analytics:

      Storing large amounts of data isn’t much use if you don’t know how to handle it. Unlike traditional storage solutions, the cloud delivers a better, cheaper and more personable approach to big data and analytics. The intelligent insights you can harness allow you to deliver the best internal and customer engagement actions for your business.

      Big data and integrated customer relationship management tools can allow you to:

      • Gain a 360-degree view of customer information and profiles. This can allow financial services to gain a better insight into customer trends and risks, as well as offer an opportunity to improve customer services.
      • Analyse transactions and operations quickly without having to manually look through masses of documents and memos. Ultimately, this allows the financial services to gain better insight into market trends, provide better customer service and help to automate some time-consuming workloads.
      • Access structured and unstructured data quickly across one integrated platform. Financial services are able to analyse this data to gain insights into regulatory risks across all disparate sources.

      Embracing Change

      Due to the regulations surrounding financial institutions, these organisations have historically been slower at adopting the cloud than other verticals.

      However, the competition is not going away. The financial services industry is being challenged by more digitally focused banks that are able to offer their services quicker and more efficiently. This is because they have built their infrastructure in the cloud.

      Using an experienced partner can help you to achieve the maximum benefits the cloud has to offer. So, if your financial business is ready to make the move to the cloud, contact us here. We’d love to hear from you.

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      Let’s discuss how we can help with your cloud journey. Our experts are standing by to talk about your migration, modernisation, development and skills challenges.