Financial services happens to be an earlier adopter of new technology. Within the 1800s, for example, banks were quick to utilize newly-laid transatlantic cables to trade bonds, currencies and stocks with unprecedented efficiency and speed. In the 1950s onwards, the arrival of mainframe computing with punch card, paper tape and magnetic tape I/O systems, similarly proved fitting towards the industry's needs by digitising potentially thousands of lines of customer, transaction and capital data at huge scale.
The natural affinity between your financial sector and IT is best demonstrated today by the industry's rapid adoption of cloud computing. Based on research conducted by IDC and Cloudreach, over 70% of monetary services organisations have either recently migrated or are in the process of migrating to the cloud, showing a clear lead over the manufacturing , media & entertainment , retail , and transport & logistics sectors.
An inflection point in the adoption of technology in the financial services industry
The pandemic is a significant catalyst in pushing all industries to the cloud. Nowhere has this been more true than in the financial services sector. According to the survey, 82% of respondents in the financial services industry cited the pandemic and an rise in remote working as a trigger for moving towards the cloud, significantly higher than the cross-industry average of 65%.
But why did the pandemic have this kind of effect on cloud adoption in the financial services industry? The reason is based on the accompanying events that respondents identified: 74% cited regulatory changes and 66% said the necessity to improve security, both of which are markedly higher results compared to cross-industry averages .
To enable staff to work from home and permit customers to access services and products remotely, all while meeting high-level security and regulatory requirements, accelerating cloud adoption would be a no-brainer for financial services organisations. But apart from simply solving existing problems, the cloud has additionally brought significant benefits.
What are financial services companies achieving?
When you are looking at the benefits financial services organisations are realising because of adopting cloud, the results speak on their own. According to the IDC study quoted above, on the scale from 1 to 5 , the areas where financial services have felt probably the most empowered to innovate after moving to the cloud are: user customer experience , operating model and the overall ecosystem of supply and cost chains . Additionally, organisations also report being more prepared to address economic recession , data privacy and business continuity .
The results also demonstrate that organisations inside the sector are utilizing the cloud like a solid foundation which future digital initiatives could be built. The most commonly cited among these were: enabling the use of sensors enhanced with advanced and predictive analytics for better decision-making , improving collaboration across internal functions , and creating more resilient supply and value chains
Advice for all those embarking on a cloud migration journey
The past 18 months show how unpredictable the world could be and how abruptly things as they are can alter. From a broader perspective, therefore, the best goal that organisations must have in your mind when moving towards the cloud is to become future-ready.
What does it mean to become future ready? This means getting the agility to enact massive change without causing major disruption. This means opening up new efficiencies to attain more while using fewer resources. Crucially, it means having your sights set on completing digital transformation, a stage at which 29% of financial services organisations report they have reached, significantly more compared to 21% cross-industry average.
Based on what probably the most successful financial services organisations do, here are a few key initiatives which help take full advantage of digital transformation:
#1 – Automate migration processes
AI/ML algorithms can take away the burden of mapping out dependencies inside an organisation's core infrastructure, while also finding opportunities to modernise the cloud estate. By doing this, financial services organisations can leverage native could technologies and architectures to reduce costs and drive efficiencies in application development and operation. This will significantly accelerate the rate where enterprises can plan, launch and continuously track their cloud modernisation strategies.
#2 – Leverage the strength of DevOps
Practices such as continuous integration/continuous delivery , which are part and parcel of DevOps, help bridge the space between development and operation activities, further increasing speed and agility. Organisations can also take benefit of DevOps as a Service solutions, which will make this expertise accessible via a simple and flexible monthly subscription, rather than spending cash hiring hard-to-find DevOps talent.
#3 Experiment easily and safely
Creating a solid foundation for your cloud migration is important for innovating securely and effectively. With correct skills, governance framework and technical design, your business can acquire new capabilities and begin experimenting. Inputting guardrails to enable governed experimentation while swapping out legacy technology and delivering new applications is an excellent method of doing this. Many companies also build and manage their cloud governance by creating a Cloud Center of Excellence . This can be a central unit of pioneers who're responsible for encouraging change over the business and incubating best practises related to cloud architecture. Their focus is on urging cloud use while minimizing risk and costs.
A model for those industries to follow
Whether it's improving customer experience, meeting regulatory and security requirements, or just being the first to adopt innovative new technologies, the financial services market is blazing a trail with regards to using cloud computing to understand digital transformation.
As the results quoted above demonstrate, cloud migration isn't simply a few addressing specific issues – it is the next logical step for those industries both in realising and being ready for the future. The opportunity to experiment and innovate with new solutions via the cloud and deliver higher value services to customers is an imperative, not an aspiration.