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Cloud is the answer – what was the question?

AWS, Capital One, Cloud, compute power, Deutsche Bank, Financial Inclusion, Goldman Sachs, HSBC, load balancing, Mox, multi-cloud, Open Banking, pandemic, Standard Chartered

October 12, 2021

  • AWS
  • Capital One
  • Cloud

Cloud is the answer – what was the question?

Against the backdrop of the FinTech boom, technical innovation and turbulent post-pandemic markets, up to 90% of global bank workloads are estimated to be moving to the cloud in the next decade.

by Craig Beddis, CEO and Co-Founder, Hadean

Varying demand in compute power was one of the core motivations for moving to the cloud. Dr Michael Gorriz, CIO of Standard Chartered, recently described how the geographical spread of the multinational bank’s trading resulted in ‘varying compute need, dependent on the presence of different countries and regions at different times of day and the pattern of the activities’.

This pattern often creates an unpredictable compute load, meaning that infrastructures need to be able to scale to ensure reliable provisioning. Some cloud providers are solving this through a load balancing feature. This is where processing power is scaled across several machines dynamically, providing an overall much more reliable IT platform.

Craig Beddis, CEO and Co-Founder, Hadean, discusses cloud and multi-cloud solutions
Craig Beddis, CEO and Co-Founder, Hadean

Goldman Sachs, HSBC and Deutsche Bank have all recently announced major partnerships with cloud platforms. It’s a move indicative of a broader industry trend towards cloud adoption, one initiated in part due to the emergence of containerisation. With traditional banks wary of hosting large quantities of sensitive information in a singular, outsourced location – containers have paved the way for a multi-cloud solution.

Containers enable the repackaging of applications for different cloud environments. This provides much needed flexibility in data abstraction and processing. Different cloud providers offer advantages for specific tasks, where for example one might offer greater upload speed, another might offer more security. Overall, being able to scale IT functions across these different clouds can help a financial organisation achieve greater agility in its services. Multi-cloud also represents a positive move for the industry as a whole. By allowing businesses and consumers to choose from a greater range of multi-cloud providers, these providers in turn compete on both price and delivery of service, improving the choice for the user. In essence, we have the recreation of competition that existed previously between banks but now in a more digitalised environment.

This migration however is no easy feat and while tech companies might have succeeded in convincing financial institutions of the merits of cloud computing, namely reduced overheads and a faster time to market, true success will lie in mapping out feasible cloud strategies. Decisions will need to be made on what to migrate, when and where.

Navigating the pitfalls that come with this change is difficult, particularly with the number of different options and choices that multi-cloud strategies offer. Taking a ‘cloud native’ approach has been popular among a number of financial institutions; for example, Standard Chartered’s digital bank Mox launched in Hong Kong as a cloud-based banking platform, while Capital One moved its entire service to run on AWS, saying that: “The most important benefit of working with AWS is that we don’t have to worry about building and operating the infrastructure.”

Wider economic effects, trends and hardship are also demanding change, with the pandemic putting on pressure to cut unnecessary costs. While changes of infrastructure have large initial costs, the move to cloud ultimately represents a more efficient mode of service delivery and will save money in the long run. The serious reduction of demand for in-person services that banks offer has also led to branches closing and the increased importance of digital services.

Open banking has been one of the most disruptive developments in finance of recent years with the customer’s information no longer exclusive to the one bank. It led to both an increase in exchange of data as well as a wave of innovation in banking services.

Increasing financial inclusion has also been a driving force on the consumer side, with FinTech start-ups forming to meet the demands of the rising number of people looking to increase ownership of their finances. This has put further pressure on accessibility in financial services, with the cloud’s flexibility primed to fill the gaps. It is cloud-native and scalable systems that will provide the ultimate platform for financial services and the various applications required to provide future innovative functions.

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