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How Covid-19 accelerated cloud investment in the financial world

Cloud computing is no longer a thing of the future for banks that want to remain competitive

Cloud is no longer a future or emerging trend, but a critical investment a financial institution must make to remain competitive.

It took the abrupt move to remote working at the start of the Covid-19 pandemic for financial institutions to push cloud investment to the top of their agenda. This is demonstrated by HSBC’s strategic cloud agreement with Amazon Web Services (AWS), Deutsche Bank and Google Cloud’s 10-year strategic partnership, and Santander’s latest announcement that it is migrating more than 200 servers to the cloud per day, with a 2023 deadline to complete the transformation. 

Today, hybrid working is a critical business need, and it relies on the cloud for continuity and productivity. Cloud strategies are rightly in the spotlight. According to an Association for Financial Markets in Europe and PwC survey, 2020 saw a 30% rise in cloud adoption from 2018, and Gartner estimate that cloud spending is set to increase by 18% in 2021 alone. 

As financial institutions continue hybrid working long after the pandemic, they must consider if they have the capability to migrate to, or better utilise, the cloud while also navigating extensive security and regulatory demands. 

Adopting the cloud 

Amidst pandemic-related branch and office closures, financial institutions turned to cloud services to help internal and external operations run as efficiently as possible. One notable shift was in secure home-working capabilities.

According to PwC, only 29% of financial services firms had 60% or more of their workforce operating from home at least once per week pre-pandemic. This number increased by 40% in the wake of Covid-19, and saw financial institutions utilise the cloud to facilitate working from home and mitigate the impact felt by customers in the early stages of the pandemic. 

Although this shift to remote working is new, financial institutions were investing in cloud technologies long before the pandemic. Institutions striving for cloud choose it for a host of reasons – to offer customers more innovative services such as remote banking, to drive down costs and to suit different market strategies, for example.

It’s simply accelerated as institutions found themselves having to respond to evolving market dynamics such as bank closures and the need for cashless alternatives. Cloud became the new backbone of global finance almost overnight, helping the industry to manage an increasingly sprawling workforce, moving operations online and equipping their customers with the tools to keep the show going.

Barriers to adoption

However, the migration to cloud hasn’t been without its issues. Regulation, data security and the risks that accompany outsourcing internal processes are a few that senior decision-makers must contend with. 

Take data protection, which is a top priority for many governments in the current hybrid environment. Despite data protection being high on the public agenda, the lack of control and visibility into security in cloud environments have prevented many financial institutions from embracing the cloud.

Financial institutions in particular face the challenge of multiple different cloud connections on a global scale, needing to connect to a combination of their own datacentres and multiple cloud providers – all while trying to comply with data storage regulations that insists on data being held in, and only accessible from, its country of origin. 

The problem is that multiple public cloud providers inevitably increase the complexity of management and security which affects institutions’ bottom lines. For financial institutions trying to simplify their complex cloud environments, multicloud will be their path to cloud bliss, reducing costs and security breaches, as well as giving them the agility to innovate and scale.

It’s a complex process, and the first step should always be to think carefully about cloud strategy, one that is driven by an institution’s objectives and galvanised by management consistency.

It's all about strategy

To make the most of cloud’s benefits, financial institutions should look at their long-term plan to determine how their infrastructure needs will evolve over the next five, 10 or even 20 years.

As the burden of compliance mounts, finance firms should consider cloud management solutions that put compliance at the heart of the strategy, giving more transparency over cloud environments and helping to manage different workloads seamlessly. 

Many cloud providers offer multicloud visibility as an ‘add on’ to software and storage, but it should be a priority at the core of cloud investments. If you can’t see or get your data from one cloud to another without hacks or delays, then what is the point in investing in it?

Solutions that have a global presence and multiple points of connectivity from cloud on-ramps will also be key to mastering the cloud, giving decision-makers ultimate flexibility as they ramp up to meet their institution’s cloud ambitions.

Cloud solutions powered by an ultra-performant network will make a difference too in being able to adapt to an always evolving finance world. Selecting the right technology partner can help facilitate this migration – find one that’s a good fit for your institution’s ever changing priorities and they will help to speed up and remove the chaos at every stage of cloud adoption.

Maintaining acceleration

Due to coronavirus, cloud infrastructure has needed to scale quickly and globally – not only to accommodate remote workforces, but also to support business-critical applications, products and services. 

For many institutions, there is still work to be done, and every institution’s journey towards a cloud-first strategy is unique, but challenging circumstances have given us an opportunity to lay a new foundation for growth – the rewards of which will stretch well beyond the pandemic.

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Matthew Lempriere is head of UK, Asia Pacific and the Middle East at BSO.

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