Most APAC banks to spend more on cloud this year
More than nine in 10 banks across Asia-Pacific are increasing their cloud spending in 2022 after years of hesitation due to initial regulatory hurdles
More than nine in 10 banks across the Asia-Pacific region plan to increase their cloud spending this year, underscoring the growing importance of cloud computing in their digital strategy, a new study has found.
According to a report by IDC, the higher cloud spending is a big leap from many years of hesitating on cloud, largely because of initial regulatory hurdles that banks had to overcome.
By 2023, 93% of banks across the region expect to reach an inflexion point and operate in hybrid and multicloud environments.
“Cloud is now seen as the underlying architecture for business applications, even those deemed mission-critical,” said Michael Araneta, associate vice-president of IDC Financial Insights. “The key imperative now is to prioritise which application-based workloads will give more business value once they are on the cloud.”
The report pointed to so-called “horizontal technologies” – applications not specific to banking – that appear to be prioritised by banks in their move towards cloud. These include finance applications, back-office, contact centre, enterprise resource planning (ERP) and email.
However, there are applications specific to banking that are being moved to cloud. The top five of these are mortgage origination for consumers and small and medium-sized enterprises, cyber security for banking apps, fraud detection and prevention, staffed channels, and digital service channels.
Core banking systems are also being considered by banks in their move to cloud, said Araneta. “Nothing is as mission-critical as core banking systems, with applications related to core banking also cited as being primed for the cloud,” he said.
He added that the use of cloud for core banking systems will be driven by banks that are building digital banking brands and digital-native core systems.
In the process, business logic of key functions such as deposits, lending and payments, which used to be part of a monolithic core, are being abstracted from legacy systems. “These applications are refactored into microservices, and then, on a piecemeal basis, migrated to the cloud,” said Araneta.
Indeed, moving the most important applications to the cloud has been a focus at Australia’s Bendigo and Adelaide Bank. Not only is it building a new lending platform, but the bank, which has more than two million customers, is also going cloud- and API (application programming interface)-first in its technology modernisation efforts.
The bank has already reaped returns from its cloud journey. A recent move to run critical payments on the cloud has cut processing time from weeks to hours, according to CIO Andrew Cresp.
Read more about cloud in APAC
- With a strong DevOps culture, Bendigo and Adelaide Bank has been moving its most important applications to the cloud in a journey that has already reaped returns.
- A cloud framework agreement with Google will make it easier for Malaysia’s public sector agencies to access Google Cloud services through a single government contract.
- Amazon Web Services and Microsoft are working with local governments and supplying cloud technologies to support the region’s growing space industry.
- The Alibaba Cloud VMware Service is aimed at Chinese enterprises that are looking to move their VMware workloads to public cloud, perform disaster recovery and reduce their on-premise datacentre footprint.