Banks and credit unions have been slower than many other industries to adopt cloud technologies. According to a recent survey of banks included in Accenture’s report on cloud readiness, “Cloud and Clear,” it found that 43 percent of institutions have “no cloud strategy or have only started implementing basic cloud practices,” while 63 percent don’t have key performance indicators in place to measure progress.
That’s a problem. Banks are confronting disruptive competition from a growing field of nonbank financial services companies that strive to offer personalized products at lower costs, driven by their access to new forms of data. The cloud is an important part of what makes this possible; banks that fail to move quickly enough to transition workloads to the cloud risk being overtaken by more agile rivals.
And yet, banks “are not moving fast enough to avoid potential disruption,” Accenture explains. “Cloud operations differ significantly from traditional IT operations and banks should be ready. Furthermore, the transition isn’t possible without cloud-native skills, new organizational approaches and cultural changes.”
At the same time, moving to the cloud is about more than just keeping up with the competition. Banks making the transition are discovering unique opportunities that on-premises data centers just can’t match.
For example, at the Google Cloud Next ’19 conference in San Francisco in April, one international bank told BizTech that processing time for its daily and monthly global liquidity reports, which regulators use to review banks’ cash positions, dropped dramatically after moving the Big Data crunching to the cloud. The bank also has plans for some customer-facing tools to will build in the cloud.
5 Keys to Cloud Strategy for Banks and Credit Unions
Does that mean banks should rush into cloud adoption? Not at all. But now’s the time to begin developing a cloud strategy — and to that end, here are some things for smaller banks and credit unions to consider when it comes to deciding whether (and what) to move to the cloud.
Know what you’re already doing in the cloud. Just because a bank has an on-premises data center where most of its workloads are performed doesn’t mean it has no cloud experience. Most businesses of all types use some cloud-based solutions. Anything from Gmail to any number of Software as a Service solutions run in the cloud.
Consider your goals for a cloud transition. Moving workloads to the cloud can often mean access to greater computing power, the flexibility to quickly and affordably scale data storage up or down as needs demand and financial benefits such as cost certainty with the cloud’s OPEX-oriented subscription pricing and (sometimes, but not always) lower total costs. Each bank should determine what it hopes to gain from a cloud transition over a period of time. Depending on the circumstances, maintaining or acquiring the right kind of data center technology offers considerable advantages.
Assess your workloads for cloud readiness. Many businesses, including banks and credit unions, are adopting a cloud-first mentality — striving to build new applications in the cloud while taking a slower approach with their existing workloads. Most banks have been reluctant to move their core banking systems off-premises, but are more open to the cloud with other types of workloads. The goal for a bank should be to evaluate each workload individually and determine what is a candidate for a cloud transition and what should stay on-prem.
Understand the security implications. The cloud is just as secure, and probably more so, than most banks’ on-premises technology — provided that data is placed on the cloud with the proper security configurations. The major cloud vendors, such as Google and Microsoft, have outstanding security expertise, and all are certified compliant with federal data governance standards. There’s also a growing market of cloud access security brokers that can not only help secure cloud applications, but also monitor use and enforce firmwide policies. Yet any business that transitions to the cloud should remember the owner of the data — in this case, the bank — is still ultimately responsible for data security.
Get help. Transitioning to the cloud can be a complicated undertaking. With so much at stake, banks are wise to seek the counsel of a trusted adviser who can help them understand what workloads are most suitable to move and which cloud provider is best for them.