We spoke with Shamayun Miah, who has been in the technology industry helping organizations move to digital. Here is what we have learned from his recent Cloud Migration experience in Banking.
Many firms are adopting SaaS, IaaS, PaaS and migrating their workloads to Hyperscalers. It allows them to analyze large volumes of data, run more advanced analytic models, ship new products faster, and create new consumer experiences.
Despite the growth of cloud computing, the adoption for banks has been slow compared to other sectors. Most Banks in the UK have found it difficult moving away from their mainframe systems and transitioning their core banking solutions to the Cloud.
Some early adopters have benefited from creating their banking applications on cloud-native products. Fintech, on the other hand, has done very well in their cloud journey as they built their application native on the Cloud; they benefited from not having to deal with monolithic legacy systems.
The move to the Cloud gives banks a platform that makes servicing consumers much easier and faster. The Cloud is a powerful and cost-effective technology that continues to be embraced by the business world. Plus, it can help financial services organizations outperform and grow revenue. Moving the compute power on the Cloud and workload has made companies lower their operating costs and at the same time build modern IT environments that are capable of rapid development, easier integration, a highly automated and greater level of agility.
According to Shamayun Miah, for larger Banks with complex IT infrastructure, a portfolio of custom applications and running core banking applications on mainframes, the task to move the processing power and data to the Cloud is a massive undertaking. These banks require an extreme level of data, security, compliance and application portfolio analysis and management. The banks will need to carefully balance the benefits of the Cloud against its implications for their current operations.
Moving your finance data or application to the Cloud has its challenges.
Cloud computing is rapidly becoming the lifeblood of most businesses and institutions, and the discussion has focused on technological aspects mostly. But it requires a business and operations perspective to make the most out of it.
Cloud migration is a transformational move that entails migrating and deploying a bank’s or financial institution’s applications, data, and workloads to public cloud service models on a large scale. In most cases, all data will not move to the Public Cloud as most banks will opt for a hybrid cloud approach, some data will remain on-premise, and some workload will move to the Public Cloud. Banks should always consider having a multi-vendor cloud approach to de-risk.
The banks need to take the following steps to transfer to the Cloud;
Lay the foundation for cloud migration:
As digital transformation becomes the norm, many financial institutions are adopting tactics that facilitate their cloud transformations. If companies fail to implement it correctly, we may see another legacy-era catastrophe in cloud migrations in the coming years. The point is recognizing the best practices for different industries can differ substantially. Understanding everything well is the key to the success of cloud endeavors.
Prepare a full-proof migration plan:
The banks need to prepare for the inevitable changes to migrate to the Cloud to stay ahead in the tech world. Banks should focus on which applications and workload to move to the Cloud.
Banks should be cautious in choosing the right cloud hyperscale to ensure the reliability of their operations. Banks need to know they can trust their cloud provider to provide the performance and succeed in the future. The top 3 hyperscale are Google GCP, Amazon AWS, and Microsoft Azure.
As banks learn the art of using next-generation technology, there is a need to focus on information security and compliance. Many application functionalities will be relocated from the legacy provider to a new cloud-based system as part of the migration.
Evaluate the disruptive market factors:
The growth of new entrants in the Fintech market is accelerating at a pace that makes it impossible to retain long-term competitive standing in some sectors. Most incumbent businesses considering a cloud migration fail to evaluate the present disruptive factors of the market.
As you begin to build this plan, start by examining your current data center, including an overview of the data center, the applications and services that run there, and any initiatives that may be the plan for the future.
The cloud migration step should be discussed in detail in the rollout plan, even if not scheduled for immediate implementation. These discussions should include software vendor recommendations, expected architectural changes, next-generation architecture requirements, migration procedures, product development initiatives, delivery models, and team capabilities.
Organizations need to be organized and managed, but more importantly, they need to keep their workloads organized. It is necessary to pre-plan everything and finalize a migration leader and other members.
That team should include an executive sponsor, designated IT officer, cloud migration project executive, project manager, group of developers, and a team dedicated to maintaining cloud migration services. This team of specialists should have the influence and perspective of senior leadership.
Before a cloud migration, it is necessary to understand how a cloud migration moves the institution forward and contributes to its overall digital transformation strategy. Migrations from on-premise to the Cloud should be deliberate, measured, and purposeful. The migration should move the organization from a single-double-digit percentage of IT budget or IT expense reduction for IT projects to a significantly more manageable 10%–30% of IT expense reduction for the Cloud.
Security, Security, and More Security
The most common reason for banks being slow to adopt the Cloud has been security. These security doubts and challenges have been because of moving data outside of their institutions. There is a risk of data hacking if the banks migrate to a cloud service.
In addition, there is the data sovereignty issue. Banks need to form specialist security teams and work with external partners in this area.
Shamauyun Miah said that The migration to the Cloud can bring substantial IT and cost-benefit. Banks can reduce IT operations costs to run the infrastructure by 20-30% per annum. There are also the business benefits: releasing products faster, creating new user experiences, or capturing new market shares.
However, it is not practical for all migrations of applications to take place at once. Banks need to sequence their portfolio migration efforts, ideally front-loading them with applications for which cloud migration can deliver significant savings and performance improvements. Banks need to reskill, hire, and partner with Cloud specialist providers, as the skills required are highly demanded and difficult to source.
Shamayun Miah is also the author of;
Shamayun Miah – Digital Reinvention of Traditional Banks to Fintech
Shamayun Miah – The Future of Bricks-and-Mortar Retailers Post COVID-19