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Major moves that can assist financial institutions in migrating to the cloud

How Financial Organizations Can Tap The Potential of Cloud

April 18, 2023
 by 
Kazuaki MatsuoKazuaki Matsuo
Kazuaki Matsuo

Ten years down the line, banks and financial institutions will no longer look like what they are today. With technologies disrupting every industry, there have been significant changes in the financial space as well, which has made transactions, deposits, and different monetary and financial activities much easier. However, despite being ahead of the curve in several ways, when it comes to cloud technologies, financial institutions are often considered to be at a very novice stage to date. Several kinds of research also suggest that a very meager percentage of leading financial organizations have expanded their IT and business footprints in the cloud. Currently, financial operations often fall short in the space of augmented functionality that offers intelligent observability aligned to customized recommendations and actions, which can help optimize customers’ cloud spend. According to Gartner, augmented FinOps will be characterized by improved cloud cost optimization and budget planning efforts by 40% through 2026. Hence, financial organizations are gradually picking pace in migrating to the cloud in order to garner the benefits of cloud infrastructure and add value to their existing business.

This article will walk you through four major approaches enabling financial institutions to migrate to the cloud and future-proof their business.

Why should financial organizations migrate to the cloud?

What's driving financial institutions to move to the cloud is a big buzz across the industry now. The cloud is becoming the primary location for businesses to store their crucial data, and even applications, moving from their on-premise data to remote cloud infrastructure. Financial organizations continually strive to stay ahead in the tech-centric curve; most organizations are now spontaneously seeking effective ways to deploy the cloud for financial services. The primary reasons for migrating to the cloud include the following —

  • Cost reduction
  • Agility and innovation
  • Scalability
  • Consolidating data centers
  • Driving digital transformation
Also read: Your Digital Compass on Cloud Modernization

Primary moves to future-proof financial institutions in the cloud

1. Migrating to the cloud in increments

As banks have relied on legacy systems for a long time, today, the financial realm realizes that these traditional systems are the key barriers to their growth. And as technology is gradually becoming a pivotal part of the financial realm, there is constant pressure on financial institutions to innovate quickly and adopt the advancing cloud technologies. But utilizing a lift-and-shift approach when it comes to migrating to the cloud can negatively impact the workflows of financial institutions. This can only help offer limited benefits to the organizations and customers as their existing tasks and workflows are not completely scalable or cloud-ready. It is vital that financial institutions consider cloud migration as a gradual transition and begin migrating the most pressing task loads to the cloud in a controlled and planned manner. This helps ensure that the tasks are securely moved to the cloud and nothing is lost in the process while ensuring that customers are not affected severely by the periods of downtime.

2. Focusing on the internal considerations

Several CIOs baffle with a wide array of internal factors that often slow down the speed of cloud adoption for the core systems. These internal factors often include:

  • Lack of a major business driver- the benefits of technology alone often does not reduce the risk and cost. But it requires a clear and concise business catalyst to drive the change.
  • Risk- for a financial institution, the core system is the backbone for every other functioning within the organization. A minute mistake or incorrect decision in migrating to the cloud can cripple everything.
  • Cost- considering the available financial resources and the capacity for making investments in cloud infrastructure, and the cost to shift the on-premise data and existing workflows and processes is a crucial consideration. In scenarios where teams require several years to re-architect cloud software to align with the existing systems, garnering the complete advantage is difficult.  

When financial institutions choose public cloud solutions, their primary driver isn't cost but agility and productivity, which help gauge the benefits of advancing IT solutions and drive business value. The organizations are continually tracking the merits of identifying long-term strategic cloud infrastructure partners and adopting cloud-native models to avoid the risks of vendor lock-in. This often results in an increase in cloud-agnostic and best-of-breed models, specifically at the platform layer, as the financial institutions strive to identify capabilities consistent across different environments, adopt flexible and open standards and limit accessibility to vendor-native services that impact the architecture and workload of the financial processes.

3. Garnering cloud benefits beyond IT operations

Deploying the cloud with the sole intention of improving IT will limit the organization in capturing its optimum value. Migrating the cloud out of the IT realm of the project to the business as a whole make cloud adoption more advantageous and requires two primary considerations—

  • Changing the operating model: immensely successful organizations own a working model where technology and business work hand-in-hand across cross-functional teams. This helps align the entire cloud migration toward the business value generated.
  • Beginning cloud migration at the domain level: instead of moving individual tasks or applications, which can make the process siloed, a complete product service or function, or a complete suite of the tech stack associated with one business domain is always helpful. It is wise to move one business domain and utilize it to develop a repeatable process and leverage support skills that can be utilized domain-wise across the organization. In many scenarios, organizations begin with applications that are simpler to migrate; but the complete value of cloud migration is rendered when these apps mutually align within a domain.

4. Strategizing for a future in multiple clouds

Planning for hybrid and multi-cloud operating systems can be a major move for financial institutions to future-proof their business in the upcoming cloud landscape. As no multi-cloud architecture is perfect for all business workflows, when it comes to assorting required tools, selecting services, and sourcing models for every technology stack, CIOs are required to determine their strategies with respect to a multi-cloud or hybrid cloud model. Additionally, they are required to delineate the techniques for implementing the strategies with respect to the tools, operating models like multi-cloud or hybrid models, and sourcing models.

5. Establishing cloud security for financial services

While organizations have realized the importance of the cloud and how to tap its full potential, it is crucial to understand that no cloud advantages will apply if the security is compromised. Financial organizations must have clear vision and objectives to determine how they can effectively achieve security goals and efficiently deploy the cloud to achieve agility and security of the organization as well as end users. As organizations implement security in the cloud, it is essential to consider the organization's ideal security setup and arrive at an agreement with the stakeholders involving business and IT leaders about setting and achieving the goals. As DevOps developers are adding new codes into the existing infrastructure every now and then for digitizing financial services, there are often chances of security breaches. This is where the concept of Security as Code comes in. Security as Code refers to the toolset of resources that enable DevOps professionals to secure and protect the SDLC across the entire development process. 

Also check: How Intelligent Automation is Disrupting the Banking Industry

How HeadSpin helps financial institutions across the cloud migration journey?

HeadSpin offers an AI-driven test automation platform that enables financial institutions to test their applications end to end to ensure optimal performances and functionalities for driving superior user experiences. HeadSpin's data-driven capabilities help to execute software testing in financial services and build high-quality applications, thereby adding value to the business. 

Following are the stages where HeadSpin helps organizations seamlessly move to the cloud —

● Pre-migrationṣ

In this stage, the HeadSpin Platform enables users to launch critical user journeys and measure the quality of experiences, the critical KPIs that impact user experience, and offer a detailed view of app composites. Additionally, HeadSpin enables financial institutions to baseline app internal cycle times for every application and assess performances of in-app services, functions, and methods to help benchmark how the existing environment is operating.

● Migration

With seamless integration capabilities of the HeadSpin Platform, it helps execute the same user journeys utilized during the baselining exercise on the same devices, locations, and networks and identify regressions. HeadSpin also helps compare build over build, location over location, device over device performance, and render time series for critical KPIs and migration progress.

● Post-migration

The core areas where HeadSpin helps financial institutions in post-migration stages include:

  • Digital resilience, where the platform helps to continually monitor different services in a cloud-native app or monolithic app
  • End-to-end automation, where the solution helps automate entire customer journeys, perform end-to-end testing, offer deep integration of the test integration of test sessions with the CI/CD concept of build, and much more.
  • Additionally, HeadSpin helps identify critical performance and functional issues and perform benchmarking using AI-based testing insights.

By driving cloud migration with end-to-end software automation in the BFSI sector, HeadSpin has helped leading organizations to increase TAM by delivering the best customer experience through digital channels, improve digital experiences while ensuring security, and optimize QA processes. 

Bottom line

As technology rapidly percolates into different industries, financial institutions are devising innovative strategies to move securely into the cloud. Organizations need to execute their plans effectively for a better future in the cloud by making the integration right rather than making the transition fast. Again, a cultural shift away from the long-established approaches for technology across financial institutions has been a big limitation in the path of cloud migration, which needs to be gradually eliminated with the advancing suite of technologies that will make cloud deployments easier and add significant value to the business.

FAQs

Q1. What are some of the Security as Code best practices?

Ans: A few best practices to deploy Security as Code include:

  • Automating feedback loops
  • Automating scans and security testing
  • Implementing monitoring functions
  • Performing routine security policy checks

Q2. What are the multiple ways to deploy cloud services?

Ans: The primary methods of deploying cloud services include —

  • On a private cloud
  • On a public cloud
  • On  a hybrid cloud
  • On a community cloud

Q3. What are a few risks of ineffective financial app security?

Ans: Some of the risks to the vendors of financial apps that significantly impact the business are:

  • Data theft
  • Intellectual property theft
  • Loss of customer confidence
  • Regulatory fines and damage payments
  • Increased IT investments
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