Feb 04 2022

The Benefits of a Multicloud Approach for Financial Institutions

Banks looking to accelerate their digital transformation will benefit from a multicloud environment.

In many ways, financial institutions face the same technological challenges as any other industry. The threat landscape is constantly and rapidly evolving. Customer habits are gravitating to more remote and digital interactions, and the digital transformation of other industries has raised the stakes for banks to modernize their customer service.

Given these multiple demands on an industry that tends to be cautious of new technology and is saddled with extensive government regulation, it can be challenging to innovate quickly. According to a recent IBM report, “traditional banking systems are not particularly flexible, making it expensive to adopt new technologies or deploy new functionality.”

Some leaders in the banking industry have recognized these obstacles and are adopting an open, hybrid multicloud approach, which can help to balance innovation with security and compliance requirements.

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Why Some Financial Institutions Are Still Wary of the Cloud

In the current climate, where customer behaviors and expectations are continually evolving, flexibility and adaptability are key.

In a recent blog, Google listed some of the difficulties banks face in moving to the cloud. “The barriers to adoption vary, from the complexity of legacy systems, to trust and skills gaps, regulatory uncertainty, and fragmentation of compliance requirements.”

At the same time, banks are grappling with the ever-increasing amount of data they collect while simultaneously pivoting to counter cyberthreats in an ever-changing threat landscape. In addition, the IBM report notes, “banks face technology challenges associated with infrastructure, applications, processes, data, and customer engagement.”

READ MORE: Learn how banks can decide which storage solution is right for their data.

How a Multicloud Environment Can Benefit Banks

While cloud technology may seem to present new challenges for financial institutions, it offers great promise as well. A cloud-based infrastructure can provide greater scalability and agility, which allow organizations to adjust more quickly in response to changes in the market.

According to IBM, pragmatic leaders are taking this lesson a step further with an open, hybrid multicloud approach, which integrates traditional computing platforms with private, public and managed cloud services: “In essence, a hybrid cloud becomes a virtual computing environment that aligns workloads and interfaces with the most appropriate computing platform. All these services need to be managed as though they were designed to behave as a single unified environment.”

A hybrid multicloud approach combines the flexibility of the public cloud with the security features of private cloud and on-premises data storage, allowing banks to optimize the best features of each platform.

“This can help structurally reduce cost of operations, as well as balance ownership and flexibility with regulatory adherence. And by allowing workloads to run on multiple platforms in multiple interoperable environments, an open, hybrid multicloud architecture enables portability of workflows and data accessibility,” the report states.

LEARN MORE: Find out how cloud security posture management can help banks protect their data.

Hybrid Multicloud Might Be Right for the Financial Sector

The report calls open hybrid multicloud “the logical configuration for financial institutions” because it balances business needs with IT requirements and cost constraints. A multicloud approach also prevents an organization’s dependency on a single cloud service provider or technology.

A hybrid multicloud approach also enhances security by providing access to defense tools that are powered by artificial intelligence and designed specifically for the financial sector. AI can also be used to improve customer service, workforce efficiency and regulatory compliance.

In addition, a multicloud approach can enable forms of technology that will accelerate digital transformation. Some of the technologies cited in the report include augmented reality to enhance customer engagement with bank employees, as well as 5G for the workforce to support efficient work from home without sacrificing performance.

Getty Images/ Chinnapong

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