Banking

More Than Just Cutting AWS a Check: The Imperative of a Plan on the Way to the Cloud | ABA Banking Journal

By Matthew Lee

Before the pandemic, many banks were cautiously exploring the possibilities of cloud-based services but interest was tepid at best. While cloud adoption was seen as a positive, it was also seen as an expensive interruption to the business—a process that would require experts to be hired and employee training.

COVID-19 changed that calculus and moved cloud adoption to the forefront of many banks’ long-term business plans. Now that the industry magnifying glass is squarely focused on the cloud, however, many are playing catch-up and finding out that the results aren’t living up to expectations. One of the reasons for this is the disconnect between engineering and banking lines of business. Most engineering groups lack a standard way of working with the lines of business, failing to identify the areas that would benefit the most from cloud migration and missing opportunities to leverage cloud benefits at scale.

An equally important misstep banks make in cloud adoption is the lack of an end-to-end vision for how cloud will impact their organizations. In the interest of moving quickly, many banks find themselves managing a patchwork of department-level applications. Instead of being part of an overall strategy, cloud is a series of piecemeal IT projects that have limited impact on the business as a whole. This approach often results in cloud adoption never moving past a proof-of-concept stage, resulting in organizations limiting their success by foregoing an enterprise-wide view of critical infrastructure.

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Banks that instead take the time to create a plan which helps identify cloud providers’ strengths may find themselves in a better position to directly support their organizational needs. Building a cloud migration plan is a fundamental prerequisite for success. Here are six aspects of a comprehensive plan for financial organizations shifting infrastructure to the cloud:

1. Identify the cloud service that most aligns with your business goals and strategies. Because most institutions adopt a multi-cloud model to alleviate regulators’ concerns about reliance on a single platform, making an organization-wide cloud mandate creates fundamental advantages. Before getting started, banks must ensure that they align their applications’ business priorities to each provider’s strengths—for example, choosing Amazon Web Services when resiliency is the top criteria, and Microsoft Azure as host for enterprise databases.

2. Decide on key operational and engineering success criteria. In order to evaluate how successful the migration is, align program and success metrics. This will also create a better benchmarking standard for other migration programs that may occur in other parts of the business. By creating clear criteria for the program—such as reducing overall IT costs by a specific amount—executive and engineering leaders can ensure they are all working toward the same business goals.

3. Develop a detailed cloud governance strategy. Most banks still lack an IT governance strategy for cloud that encompasses engineering, security, operations and lines of business. Forward-looking banks should regularly evaluate the effectiveness of cloud governance policies, ensuring that they can continuously improve security, operations and cloud business strategy.

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4. Test in a similar environment. Before deploying new services in the cloud, it’s critical to test them in an environment that closely resembles the one where they will eventually run. Legacy tools, as well as supporting processes that may have been added after mergers and acquisitions may react unexpectedly to cloud-based services and it is important to ensure that any changes will not affect network and service uptime during updates or platform changes. Due to the costs often involved in replicating environments, it’s less important to ensure perfect testing environments–getting as close as possible works just as well.

5. Be open to new metrics. Legacy environments may use metrics that do not easily translate into the cloud. Likewise, measuring cloud progress may require a different mindset in order to measure success and course-correct if necessary. Cost is one example. Just as moving from on-premises to cloud changes the cost model from fixed to variable, the metrics for measuring change, too. Cloud’s pay-as-you-go model enables organizations to continuously monitor consumption, allowing for more accurate measurement check-ins monthly or even weekly.

6. Support the workforce long-term. Whether it’s by rolling out comprehensive employee training systems, or by promoting employee-run centers of excellence, banks moving to the cloud should set up support networks that help employees learn and understand new processes for storing, managing and accessing data. In addition, creating cloud centers of excellence provides a clear understanding of responsibility for cloud migration, deployment of new services and support.

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Migrating to the cloud provides a variety of benefits for banks and financial institutions that want to scale new digital services and support a greater variety of customers in real-time. In addition, cloud infrastructure simplifies banking processes and offers a powerful incentive for financial application developers, due to its ability to enable network modernization and the sunsetting of unsupported legacy services.

Where banks struggle, however, is in shaping a strategy to get their services infrastructure fully migrated to the cloud. By understanding the common aspects of cloud migration, banks can create a plan for adopting and deploying the most effective cloud solutions that maximize benefits while minimizing risks.

While some legacy banks will need to restructure their business culture, those that are able to stay flexible about their success metrics while enabling their workforce through training programs and centers of excellence will see increased levels of service efficiency and customer loyalty. By focusing on these fundamental aspects, financial service providers can reap the benefits of a simplified, modern infrastructure and application environments that are table-stakes for today’s customers.

Matthew Lee is global head of innovation for banking financial services at Cognizant.

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