Digital disruption has heightened customer expectations and fast-growing competition from digital-only startup banks, nonbank payment providers and payment apps from "big tech" companies like Amazon, Apple and Google.
With new business models potentially affecting up to 80 percent of existing bank revenues by 2020, according to Accenture, financial service companies urgently need a digital metamorphosis to grow.
That means throwing off the shackles of legacy systems, finding a balance between innovation and bankers’ natural and understandable risk aversion, and committing to emerging technologies such as artificial intelligence and blockchain.
Cloud computing represents the best vehicle to meet those goals, and financial services companies appear to know it. According to a
However, they tend to lag other businesses in actually making cloud a central part of IT operations, with most financial service companies reporting lingering caution in relying on the cloud for implementing production applications. Nearly 70 percent said their cloud projects are at the initial or trial and testing stages.
The disparity between interest and implementation reflects a continued preference for internal systems due to security and compliance requirements as well as concerns among many financial services companies that they lack the skills internally to engineer and manage cloud environments within these constraints.
So what’s the best way for these companies to overcome compliance and security hurdles and more fully embrace cloud? A hybrid or multicloud strategy, as well as the use of modern, container-based application architectures and relying on third-party managed service providers to help with any skills gaps.
Multicloud architectures that use multiple cloud vendors and providers, across a mix of public and private platforms, are quickly becoming the norm at most companies spanning every industry. It’s the best vehicle for seamlessly executing workloads in different environments, depending on their specific requirements, and achieving the benefits of agility, cost and performance.
Indeed, 60 percent of financial services companies surveyed by 451 Research said they expect to use various cloud platforms in combination with one another — slightly higher than the number for other businesses (58 percent). That suggests it is likely that the financial services sector will rely on hybrid or multicloud architectures in the coming years to overcome some of the barriers they face in implementing cloud.
Financial services businesses will need to increasingly look to containerization to benefit from the multicloud architectures. Container and container management technologies are crucial for both new, cloud-native applications and re-engineering of legacy applications for migration to the cloud.
This modern approach — multicloud, heavily containerized — is the perfect platform for these companies to explore emerging technologies such as AI and blockchain. Coupled with a model-oriented, multicloud application orchestration tool such as Juju, a single operational paradigm can be achieved allowing for optimized economics across all the leveraged cloud substrates.
AI and machine learning hold great promise for the industry in automating manual processes, gaining insights into customer behavior and reducing IT costs. Blockchain has potential to change the way transactions are conducted and how interactions between financial institutions take place.
The extent to which financial services companies that go all in on cloud could well determine how well positioned they are to capture the opportunities that these new technologies offer.
The next few years will be a critical turning point for financial services companies. They have shown themselves to be forward thinkers in terms of cloud’s potential; now the time has come to increasingly depend on the cloud for more production applications and emerging technologies and choose platforms, partners and tools that will turn them into butterflies rather than fast caterpillars.
