The wave of digital acceleration brought about by the pandemic has cast the spotlight on cloud-native technology and data management as an industry-defining upgrade. Even a traditional sector such as banking and finance is forced to rapidly embrace the cloud-native approach for its potential to transform digital structures and transactions.
Cloud-native technology is improving digital performance for banks by making data aggregation and storage more efficient. Speed and flexibility are its core competence, accelerating application development and automation. It enables real-time data access and tracking for the company and customers simultaneously on a global scale, and is capable of continuously updating and maintaining all aspects of the infrastructure automatically. This high performance comes at a significantly lower cost to existing data systems, with even greater ease of system management that even integrates existing legacy systems. Thus, the upsides of cloud systems for the banking industry are clear and applicable on a wide scale.
A 2021 report by BCG estimates two-thirds of companies already use multiple cloud solutions and by 2025, up to 60% of consumer-facing applications, 40% of data warehouse and analytics workloads, and more than 30% of core business applications will be running on public clouds operated by companies like Amazon, Microsoft, and Google.
Cloud based systems are also easier to maintain, and thus offer faster recoverability and less service downtime. They offer a reliability and availability advantage, creating a noticeable business impact in terms of ROI. Their on-demand infrastructure orchestration technology can provide developers with control, visibility, and self-service as needed, under a consistent platform for ease of maintenance – virtually eliminating the risks of unplanned downtime.
Since cloud systems disassociate conjoined data from an application and physical infrastructure, they facilitate a more sophisticated analysis of information and impactful customer experiences. It provides the framework for tighter security controls to protect against data breaches and ensure regulatory compliance.
FinTech supports become vital
In an effort to stay competitive and agile in the face of new digital rivals, financial institutions of all sizes are leaning towards cloud-native approaches to respond to business demands. These demands create options and scopes ranging from launching limited pilots to moving major workloads to cloud services providers (CSPs). The aforementioned BCG report further analyzed market growth and concluded that only major banks are likely to retain substantial data center footprints in the long term – other institutions will shift their focus at least towards partially migrated CSPs and will manage their legacy workloads in co-located facilities operated by specialist third parties.
To get the accurate real-time implication and successful projection of the cloud infrastructure, banks are increasingly stepping up their collaboration with external FinTech partners to deliver personalized customer experiences through APIs. By safeguarding customer data across all channels, they are addressing not just a governance challenge, but one of reputation and revenue as well.
The latest Nutanix ‘Enterprise Cloud Index Report’ for the financial services sector shows an increasing number of financial services firms embracing cloud technology, reporting a 21% adoption rate of hybrid cloud in the sector – higher than the global average of 18.5%.
Presently, almost every FinTech organization across the sector is deploying cloud-native computing in some form. They are embracing mobile applications, online working, and providing a range of services that consumers can access globally. Most of which function efficiently and reliably when underpinned by cloud-native storage resources.
A leading digital transformation consulting firm has designed a Payments Data Platform to enable real-time cash forecasting capabilities for corporate clients using best practice cloud data engineering and management techniques. While on the other hand, their ISO 20022 Simulator is an end-to-end validation and simulation of data-rich payment messages in ISO 20022 formats for heightened interoperability across global financial firms. It leverages a cloud-enabled, microservices architecture that can easily integrate with large enterprise environments to scale and perform, enabling user-friendly interfaces for business analysts and test engineers to create test scenarios and generate single or bulk payment messages.
Larger banking institutions are expected to maintain their large pools of physical infrastructure for data storage, signaling a long transition period before we can expect the possibility of 100% cloud-native environments. For example, those that deal with mortgages and pensions are incredibly conservative and risk-averse, and by default the slowest among all to adopt cloud-native infrastructure.
Despite the long road to universal adoption, the power of cloud-based technology and data management is undeniable. As many early adopters are demonstrating with each passing day, the cloud-led transformation is paving the way to a simpler, faster, and secured banking service process.
By Uday Chaudhari, Senior Director – Technology, Synechron