How is hybrid cloud transforming financial services?

We look at how hybrid cloud is impacting the financial services (FS) sector – and the opportunity for transformation:

It is clear the cloud has enabled business operations to transform. Workforces are mobilised, business performance is boosted and applications are released to market with greater ease, spurring innovation.

Hybrid clouds provide businesses with the flexibility to look at each application and its business use and decide which environment – whether on-premise, private or public cloud – would be most effective at powering it.

As more FS organisations want to put more complex workloads into the cloud, including systems of engagement and cognitive applications, the hybrid cloud connects these to legacy on-premise systems of record on an affordable, ‘pay-as-you-go’ basis.

The main benefit of the hybrid cloud is its ability to save the business money while protecting the institutional knowledge built into legacy applications. Traditional on-premise data centres require capex investment for buying equipment and paying for the electricity to power and cool it.

With cloud computing, you move to an opex investment model, only paying for what you use. If you require more capacity, you simply start paying for more which provides much greater flexibility for growth.

Pressure points in the FS sector for hybrid cloud infrastructures

Not everyone is approaching the cloud in the same way. Every business is different and similarly, every business application has its own pressure points. A common theme in the FS sector is the volume of legislation and regulations facing companies, from policy and governance to security and compliance.

Therefore, there is a lot of groundwork that needs to be done around a strategy to ensure that any system is compliant, secure and optimised to support the application that the business needs. It’s also important to look at any software licensing issues relating to the application and to ensure that the license can be ported into the cloud to avoid paying for it twice.

Interestingly, the flexibility and easy accessibility that makes the cloud attractive can lead companies to lose control of costs.

Many businesses experience an increase in cloud computing spend by business departments independent of corporate IT budgets. The first step is to take an inventory of all applications and look at which would be easiest to move first or which would have the most benefit of moving to the cloud.

How CIO’s approach security with a hybrid cloud strategy

Security policy and governance must be integral to cloud planning and not addressed as an afterthought. The actual migration of an application to the cloud is the third or fourth step along the journey after the CIO has specified how to approach data protection and data management, including how to ensure backups once in the cloud, and the various compliance issues that go with this.

Many FS firms will turn to the hybrid cloud to address any security issues. Certain applications may need to remain on-premise for data sovereignty reasons, but there are also other perceived security risks which can make hybrid clouds more attractive. On-premise or private clouds can offer direct control to meet security and regulatory requirements, as they’re dedicated only to that enterprise.

Huge advances are being made with AI-driven threat protection. CIOs are now responsible for more endpoints and more infrastructure than ever before.

In this fast-changing security world, AI can now provide more effective prevention against cyber-attacks – and it has the ability to increase protection to 99.7 per cent from 60-70 per cent with traditional signature-based cyber protection. Driven by an agent with a small footprint and with no configuration or signature-update needs, this is a compelling argument to move applications over to the cloud.

Breaking data silos in Financial Services 

Traditional IT departments were structured around rigidly defined technology or skill sets with very little interaction across organisational boundaries. In turn, this held data hostage in pockets dispersed across the business. Different processes and coordination between teams, together with capex-driven procurement cycles, meant that companies could take months to introduce platforms necessary to support new initiatives.

Survival in today’s digitally transformed world requires a data-centric organisation. Businesses need data delivered to the right workload at the right time – regardless of location – to sustain a perpetual edge over their competitors.

Hybrid clouds allow storage to move to the cloud, from the cloud or between on-premise and cloud, making application and data migration easy. Cloud-based data can be accessed by on-premise applications and on-premise data can be accessed by ‘born in the cloud’ apps.

FinTech leveraging hybrid cloud to develop next-gen services and products

In the fourth industrial revolution, speed and flexibility to react to customer demand are critical. Cloud computing provides a foundation that enables companies to develop, test, fail, improve and launch applications with lower investment and higher velocity than ever before. However, workload environments also need to be increasingly compliant and free from risk. On-premise applications provide stability and contain years of built-in institutional knowledge. Hybrid cloud allows a business to choose the best of both these worlds.

Hybrid cloud enables cognitive computing solutions to draw on corporate data while leveraging previously unaffordable high-performance computing on a pay as you use basis. Many AI building blocks are available in public clouds and proof of concept facilities made more easily available allowing for greater innovation. Cloud servers can be set up quickly and economically to train and test machine learning models and the final model can be published and run on-premise, on mobile devices or in the cloud. This means that the business case for new services and products can be demonstrated without investing large sums of money upfront.

It is crucial to start with the business outcome and only then draw on the required data. Starting with data and trying to find a use for it will not result in a successful project – cloud-based or otherwise. The business must first agree on the insights that will bring the biggest competitive edge. Asking the right questions of the data will deliver meaningful results, whether that’s accelerating innovation, or helping to protect the company and customers.

The future of the hybrid cloud and financial services 

Although the hybrid cloud is currently preferred by established organisations, there is a move towards more financial services businesses existing purely in the cloud.

For example, CSI works with Redwood Bank, where it delivered a secure, modern digital banking platform completely on public cloud infrastructure within regulator guidelines in under six months. This was key to Redwood Bank securing their banking licence and becoming the UK’s first ‘born in the cloud’ bank. CSI continues to provide continuous monitoring and alerting for the bank and the underlying infrastructure ensuring full availability and compliance.

Embracing the cloud allows the financial services sector to be the disruptor and not disrupted, providing the flexibility to react fast. Digital acceleration, digital disruption, and digital threat are the three forces combining to push businesses forward and the cloud is allowing businesses to respond to these.

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When discussing hybrid cloud – a combination of on-premise and cloud resources – it’s important to acknowledge the emerging multi-cloud paradigm. The cloud part of “hybrid cloud” is unlikely to be provided by a single cloud provider. Organisations can use infrastructure, platform or software, all as a service from multiple private and public clouds.

Being able to manage on-premise, private and public clouds in a consistent manner is a competitive differentiator. Management extends beyond monitoring technical components to include cost optimisation, ongoing regulatory compliance, and continual service improvement.

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