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Cloud Solutions in the Financial Sector: A Technological and Cultural Shift

By Axel Petrov, Director Finance, First Republic Bank & LubomirLubomirov, CIO, Open Technology Solutions

The U.S. banking industry today is unquestionably more resilient and profitable than it was a decade ago in the wake of the financial crisis. However, the recovery has not been as assenting for many European institutions that have, among other things, been navigating the treacherous waters that are zero or negative nominal interest rates.

"Banking IT operations have increasingly been morphing into an integral part of a customer-centric fast delivery model"

The yield curve flattening and inversion, intense rivalry for deposits, and a highly competitive lending landscape in the U.S. have begun exerting negative pressure on bank margins and profitability that is only expected to intensify this side of the Atlantic as well. Cyber risks also continue posing challenges to the financial sector even as many institutions are already struggling to keep up with the pace of technological innovation. Concurrently, both emerging and established technology companies alike are rolling out a growing array of products, which are designed to contest traditional bank offerings. Those are often the same companies, with which banks have to compete for technical talent.

Against this backdrop, recalibrating the financial enterprise to operate in a swift, flexible, cost-effective, and secure way has already become a pressing necessity rather than a choice. Complacency will be costly at best.

Banking IT operations have increasingly been morphing into an integral part of a customer-centric fast delivery model. Along with this progression, a logical shift towards more effective, lower-cost, and well-protected cloud solutions has occurred.

Cloud adoption rates still vary broadly across the financial sector, but protecting critical workloads and data during the migration to any cloud-based solution has become a crucial task for any business or IT executive. Often, at different stages of the cloud adoption journey, financial institutions also end up transforming entire department structures and shifting towards bold technological advances. Entirely new operational and support models come into play. Multiple cloud solutions are often adopted within the same financial institution in order to meet a variety of Enterprise Architecture best practices, but the underlying reality is that the migration towards this more secure, scalable, and cost-effective (if done correctly, that is) technology often necessitates a cultural shift within the organization and the dismantling or reshaping of existing operational support molds.

It is thus critical that all levels of the organization have well-defined goals and a clear understanding of what a cloud migration process entails. Critical data availability and visibility in any cloud solution, along with business operations support, have become one of the essential initial requirements for any successful cloud adoption methodology. Data visibility also needs to entail all of the organization’s data, regardless of it’s on-premise, a hybrid solution, or multiple cloud-based platform hosting. Projects that focus primarily on the cost and scalability benefits of cloud solutions and fail to recognize that data fragmentation, outdated processes, and deep-rooted hierarchies can (and almost always will) hamper decision-making within the enterprise are bound for trouble. This, along with the need to orchestrate seamless application deployment and data migration, has begun shifting manual operations towards an automated complex of data-management and security-oriented tasks, which can materially reduce implementation times, the potential for human errors, and eliminate entrenched inefficiencies.

It is easy to think of cloud technology only as the next cheaper and faster way of doing things, but it is much more than that: it is a technology with the potential to steer an entire industry towards a new delivery paradigm, and at the end, a cultural shift.

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