This article is part of the series “Moving Banking into the Cloud”. For part 1, please click here.
The verdict is clear by now: banking in the cloud is the way of the future — and the reasons are as compelling as they are long. From potential cost reductions to conveniences and efficiencies, there are few reasons for banks to not make the move. Furthermore, the need is growing every day, with a new generation of users who demand instant access to products and services. Resistance to change, in this case, is very much futile, and banks can no longer afford to stand still.
With that said, it is one thing to help the stakeholders understand the benefits of banking in the cloud. It is something else to make the actual migration. After all, the process is a little more complicated than investing capital, flipping a switch and hoping for the best. There are real and significant risks involved.
If the key decision-makers are convinced yet hesitant to put plans into action, here are a few ideas to help push the agenda forward.
1. It is cost-effective: So far, the conventional approach to digital transformation has always been to invest lots of money and build dedicated on-site servers from scratch. There are security benefits to be had for sure, but the upfront infrastructure cost can sometimes hit as much as US$6 million or higher — no problem for big banks, but it is still capital expenditure on an investment that will depreciate over time. Many cloud service providers, on the other hand, operate on a monthly subscription basis, which means that there are no initial investments involved, and you pay for as much — or as little — as you need. For example, if the projected workload is going to be high in the next three months, you can increase the number of utilised servers and chalk this up as part of operational expenses. Furthermore, considering the Coronavirus Disease 2019 (COVID-19) pandemic and the potential recession ahead, it is possible for the volume of application and website users to decrease in the short term. As such, it is wise to scale down operations by turning off the number of servers required. The pay-as-you-go nature of banking in the cloud appeals to cost-minded stakeholders, and it is a fantastic way to get one foot through the door.
2. Start small with low-risk applications: Instead of migrating the entire bank into the cloud, tell the stakeholders that there are simple, low-risk operations that can be migrated first, such as data analytics and prototyping projects. Aside from testing the waters on security issues, it allows the bank to find out if there are regulation and compliance issues also. Furthermore, this gives you time to build up the necessary expertise and capabilities within the organisation. Allow stakeholders to get comfortable with smaller operations first before moving to the next rung of the ladder.
3. Engage cloud service providers/partners: Another way to appeal to stakeholders is the fact that cloud service providers have the expertise to train existing infrastructure teams. This means that the banks themselves won’t have to perform the same task from scratch, which can be expensive and time-consuming. Having outside specialists onboard also means that the transition can be done as smoothly as possible.
4. Compliance made simple: Regulatory and compliance are certainly valid concerns. That is why, in order to encourage banks to move into the cloud, many financial regulatory authorities in the Asia Pacific, such as those in Singapore, Hong Kong and Thailand, already have publicly available guidelines for reference. These checklists allow banks to comply with existing regulations without going through trial and error. For instance, Amazon Web Services (AWS)’s Atlas plots key regions in the world; their respective compliance regulations and how it may apply to the use of AWS’ services.
The right team for the right job
After the pitch, comes the execution, and the best way to start is to choose the right projects. As mentioned, instead of rushing to shift every banking operation into the cloud, start with low-risk applications, such as data analytics, personalisation, marketing or anything that requires a lot of data to be collected and processed. The best part about these use cases is that neither the customer names, account balances nor any other identifiers are required. This means that everything is anonymised and your customers’ identities are kept safe.
Next, you also want to have the right team on board. Moving banking operations to the cloud requires a series of unlearning and relearning. As such, it makes more sense for banks to take on a fresh team with an open mindset rather than using existing teams with preconceived notions of what cloud migration is and how it should be done.
Finally, go slow before you go fast. In the early stages of banking in the cloud, allow the team to explore the infrastructure on their own accord, even if it means to manually perform certain tasks, like activating servers, installing applications or creating and configuring databases. Once the team is comfortable with the cloud environment, gradually shift the spectrum towards automation using readily available tools and libraries.
In the meantime, get stakeholders and existing infrastructure teams involved also. Engage them from the get-go and provide visibility throughout the initial phases. Training packages, too, allow existing teams to be retrained and skilled up instead of being rendered obsolete. This last point is especially important. At the end of the day, moving banking into the cloud isn’t about replacing humans or reducing headcounts. Rather, it is part of embracing change and evolving with the financial industry as a whole.
The key to success, then, is to pick the right teams and projects, scale slowly but steadily, and do so with everyone along for the ride.
ARTICLE WRITTEN BY: ELANGO BALUSAMY
Elango Balusamy is the CTO of WeInvest. Elango is an established technology expert with over 18 years of experience in building high-performance engineering projects for tech and financial services business across geographies including India, Singapore, Hong Kong & USA.
WeInvest is a part of our Batch 1 Fintech Program in Singapore.
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