Sergey Tarasov - stock.adobe.com
Banks and financial services firms in the Asia-Pacific region are accelerating their use of cloud computing amid the pandemic to transform their businesses through new customer offerings empowered by data analytics, artificial intelligence and advanced back-office digitalisation.
That was one of the key findings of a report on the state of cloud adoption by the financial services industry across the region by the Asia Cloud Computing Association (ACCA), which noted that the industry is in a “period of rapid innovation enabled by cloud computing”.
“Cloud has also increased the ability of financial institutions to transfer an increasing amount of financial activity – both customer facing and back-office operations – to the online environment,” it added in its report.
Against this backdrop, the ACCA said the rapid shift to digital environment will become the new normal, as employees and customers alike have come to appreciate personal efficiency, both in terms of time savings and ease of interactions and transactions.
According to IDC, public cloud spending by financial institutions in the Asia-Pacific region, excluding Japan, will grow over three times from $4.9bn in 2019 to $18.1bn in 2024, representing a compound annual growth rate of 29.9%.
And by 2023, 85% of the leading banks in the region will curate an infrastructure strategy by coalescing on-premise or dedicated private clouds and multiple public clouds, along with legacy platforms, to assuage their many infrastructure requirements.
Despite their fervour for cloud across the region, financial institutions continue to face roadblocks in their cloud journey, especially among the largest companies that are saddled with legacy systems acquired through mergers and acquisitions (M&A).
“For many large banks and financial institutions, which are very well respected in their own right, the imperative was to complete the M&A rather than create a single unified view of the client by integrating different data platforms,” said Karan Bajwa, vice-president of Google Cloud in Asia-Pacific.
Efforts by financial institutions to modernise their legacy infrastructure are underway, but Bajwa noted that those are largely limited to peripheral systems. “They’re still trapped in multiple data silos in many cases,” he said, noting that this has hampered their ability to launch new offerings in new markets and compete with fintech startups.
Bajwa said cyber security then becomes “a kind of a casualty in that sense”, because having multiple legacy IT systems creates a larger attack surface for cyber attackers to target.
Although legacy infrastructure has been the bane of cloud adoption, financial institutions do not always approach cloud suppliers to solve their infrastructure challenges from the start.
Instead, they may look to a cloud supplier to modernise their applications, then work backwards and identify the work that needs to be done on the infrastructure side, said Bajwa.
Chester Chua, head of Google Cloud's government affairs and public policy in Asia-Pacific, said another challenge that financial services are facing is the concern over the cost of moving to cloud.
“You’ll see the correlation between markets that are very reliant on legacy IT and those that are very concerned about costs,” he said, “because the higher your dependence on legacy IT, the higher the costs of migrating to the cloud.”
Chua also observed that some financial institutions are worried about being locked into a single cloud supplier, more so for those that have not established a multicloud strategy.
Financial institutions are slowly chipping away at their cloud migration challenges – even at the most forward-looking firms where most workloads remain on-premise.
“At one client we work with – and this is probably the most progressive bank I’ve seen in terms of their cloud strategy – only 10-15% of their workloads are on public cloud,” Chua said. “I had expected that figure to be much higher, but it just shows that there’s so much more work to be done.”
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