If there was any doubt the future is in the cloud, the world’s response to COVID-19 has provided compelling evidence. The unprecedented surge in the use of cloud-enabled tools, like virtual meetings, distance learning, contactless shopping, telehealth, and Supply Chain 4.0, proves it is coming of age.
As the financial industry continues to move toward the cloud, it inherits the benefits of this maturity. Early adopters and tech-savvy financial institutions (FIs) are already deep into the process of adopting a cloud-native strategy. Non-core services and applications in customer relationship management (CRM), travel booking, human resources (HR) functions, marketing, and procurement have become common cloud entry points for the industry. FIs’ experiences with these cloud-based, software-as-a-service tools provide an insightful baseline for expanding to the banking operation.
Overcoming obstacles to adoption
Like any transformational technology, taking advantage of the promise of the cloud requires a philosophical and operational shift. When FIs identify obstacles, they’re typically in three key areas: comfort and confidence, resource management, and interoperability.
The paradigm shift from a legacy to a cloud-based environment is a significant one, and fear of the unknown can undermine comfort and confidence, quickly stalling cloud conversations. Frequently, sources of an FI’s hesitation are based on misperceptions about the cloud. First, the assumption that it’s “all in” and you must shift the entire enterprise to the cloud to make the transition. In reality, migration can be—and often is—gradual.
FIs may also dismiss the cloud as not secure enough. Data in the cloud, in fact, can be extremely safe—and in some cases even more secure than an on-premise model. And multiple cloud options—private, public, and hybrid—can help FIs balance risk by enabling organizations to mix and match, deciding where their data lives based on their specific needs and/or local regulation. Large enterprises are beginning to lean into the hybrid option, bringing in private infrastructure as the base and scaling to the public, as needed.
Resource management can also present obstacles. Migration to the cloud requires a planned investment of human and financial resources. Internal alignment across leadership, operations and IT are critical to identifying and allocating needed skills, staff, and budget. Trusted partners can help fill gaps and bring an enormous return on investment in the form of increased efficiency, speed of innovation, and long-term cost savings.
An FI’s operational infrastructure is a core element of a cloud-based model, and aging, legacy infrastructure is an obstacle. Cloud-based technology can help leapfrog legacy infrastructure, bringing together existing technology with future-ready options. This approach allows FIs to begin to take advantage of cloud-based capabilities while modernizing critical operational components in parallel to quickly advance their technology roadmap and become more agile. And it’s that agility that will level the playing field, enabling FIs―regardless of size or sophistication―to quickly adapt to evolving consumer and operational needs.
FIs that embrace the cloud gain unprecedented agility by:
- Utilizing centralized systems and tools to reduce the complexity of innovation.
- Leveraging more accessible, flexible, and cost-effective resources to accelerate innovation.
- Eliminating the need for manual completion of tasks like software installations or patches to enable more frequent updates.
- Creating a more open ecosystem for partnerships to build new products, services, or functionality and simplify the introduction of new capabilities.
- Minimizing time spent on development, provisioning, testing, and implementation to increase speed to market.
- Gaining access to broader technologies than most FIs would have the resources to create and maintain.
- Facilitating staff efficiency through the ability to refocus on core capabilities.
But how do we get there?
If you’re not yet on the cloud path, now’s the time to create a roadmap.
Start with these four steps:
- Clearly define your primary cloud objective: Is it to modernize? Or innovate? If innovation is your key driver, what innovation do you want to offer? Is it mobile apps? More effective, more targeted marketing? A more seamless digital experience? Your roadmap should be geared toward your unique goals.
- Start with a non-core capability and apply your learnings to the banking operation: While you may not directly correlate something like an HR or CRM system to the cloud, today’s solutions are cloud-based. Leverage learnings from your use of these systems to help inform your cloud strategy.
- Anticipate your levels of consumption and the related financial profile: Cloud-based services are implemented and priced based on the size of your subscription. To determine the appropriate subscription for your organization, you must first understand things like transaction volume, needed processing capacity, and scalability. Scalability considerations should also include the type of cloud model you’ll select—private, public or hybrid—and whether you may need to change it in the future.
- Select partners that can deliver in a highly regulated environment: No matter where in the world your FI does business, regulation is expanding, not shrinking. When selecting partners to support your cloud roadmap, it’s critical they are able to navigate a highly regulatory environment.
We’re just scratching the surface of what the cloud can do for the financial industry. To gain the agility to compete in today’s environment, build and invest with the cloud in mind.
Learn more about how Diebold Nixdorf is enabling cloud-based strategy through cloud-native, cloud-first solutions at Flexible Support for Your Modern Banking Environment.