Powering innovation: Financial services & hybrid multicloud strategies

By: Martyn Wilson, Head of Enterprise Sales, NetApp

 

For financial services (FS), digital transformation is no longer a matter of ‘if’, but ‘how’.

At the start of the pandemic, IDC found that 94% of organisations responded with plans to change their long-term IT strategy – which included an aggressive push to multi-hybrid cloud.

Martyn Wilson

While many businesses have made the move to cloud operations, with it comes increased regulation and risk for the finance industry.

The Financial Policy Committee (FCP) raised concern for financial services’ growing reliance on cloud tools and services, highlighting that the sector could face more regulatory scrutiny to mitigate the potential for financial stability risks.

Here, multicloud strategies have come to the fore as FS organisations take steps to ensure resiliency, embracing hybrid private and public cloud capabilities.

In this article, we’ll discuss what solutions are at hand to support the sector’s safe and secure digital innovation considering the current landscape.

 

It’s never been harder to ‘keep the lights on’

Today, digital resilience encompasses several fundamental business concepts – from change management to business resilience, operational risk and even competitiveness.

But resilience is not a new theme for financial services. Outages are high stakes and keeping services online is mission critical – with the cost of downtime being more than just temporarily unavailable services.

Customers quickly look to different solutions when services become unavailable, and retaining customers when trust is lost can be near impossible.

Availability is expected 24/7, and no business is exempt – from the largest banking providers to fintech start-ups.

Business resiliency is the foundation of modern financial institutions, and it’s imperative its assurance is recognised as a valuable, long-term investment for any organisation.

Any introduction of new technology or upgrade to existing operations must therefore be assessed to strengthen resiliency and reduce the risk of any future downtime.

Here, the right technology to ensure the lights stay on and – if they don’t – backups can quickly resolve matters so operations can continue is key.

 

Times are changing for cloud usage

The regulation of cloud data management in financial services sector continues to change – take, for example, open banking versus open finance.

The former is subject to legal, regulatory framework and only enables access to basic account data, while the latter is not subject to regulation and provides detailed data across a broader range of services.

Additionally, instances such as the Bank of England’s declaration to act on ‘cloud concentration risk’ to take control on the finance sector’s increasing reliance on a small pool of cloud providers demonstrates the continuously changing relationship between FS and cloud applications.

While cloud has the potential to support innovation for financial services, there is an increased focused on risks associated with digital solutions.

But this should not perturb financial services looking to take advantage of the opportunities that the cloud affords. Third-party support is on hand to enable software-defined and scalable approaches to help cloud migration strategies.

And third-party support can help FS organisations to reconsider their data strategies to continuously adopt best-of-breed technologies that are in line with the latest regulation.

 

Cybersecurity must be a priority

Finance and insurance businesses are most likely to hold personal data about customers (85%) than the average business (61%), according to the government’s Cyber Security Breaches Survey 2022.

And while it’s reassuring to see that 65% of businesses in finance and insurance regard cybersecurity as a very high priority compared with just 38% of all businesses, there is still room for more FS organisations to prioritise data security.

As well as having the right technology and third-party support in place, educating your employees must be the first line of defence against cyber-attacks.

By ensuring that all employees are educated to understand not only the opportunities for attack, but the risk of a breach to business security, financial services can be on the front foot to ensure business resilience in a digital environment.

 

How does a hybrid multicloud strategy work in practice?

There is no one-size-fits-all cloud strategy for every business. Each FS organisation will have its own requirements and will need to determine how to reduce risk in their cloud journey.

Not only must organisations avoid creating new legacies as they modernise existing infrastructure, operationalising cloud to drive innovation and customer-centricity must also ensure security across the whole organisation.

Currently, financial services faces choices on whether to go cloud-native with a public cloud provider, adopt multicloud strategies across both public and private or opt for a hybrid strategy that hosts workloads wherever makes sense – on-premise or in any cloud type.

For many financial services, it’s about adopting an ‘and’ approach to cloud technologies, rather than ‘or’. And as a result, hybrid multicloud environments are becoming the natural evolution for the sector.

But whichever route financial services institutions decide to take, a data-first and security-first approach to cloud migration, legacy transformation and application modernisation is key to resilience, competitiveness, and future success.

 

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