By Geeta Gurnani, IBM Technology CTO and Technical Sales Leader, IBM India & South Asia
With the customer’s power of influence widening, the financial services industry in India needs to cater to the seamless and intuitive digital-first experience their customers expect. A recent YouGov survey in India found that nearly a quarter of respondents had switched to digital-friendly or digital-only banks, while at least half were planning to do so. Therefore, it is imperative that financial institutions, like banks and insurance companies, reimagine customer-driven experiences while they balance tighter regulations around data security and privacy. This is compelling financial institutions to build tech infrastructure that is open, scalable, elastic, and collaborative. Under these circumstances, many of them have begun modernizing however it is mostly being done in patchwork. In order to accelerate their transformation journey, financial institutions must adopt a holistic and progressive approach to cloud adoption (focussing on a hybrid cloud strategy) in order to take advantage of cost efficiencies and keep customers’ sensitive data safe and meet regulator expectations.
The role of cloud in getting modernization right
In their effort to modernize, Indian financial institutions are increasingly looking to the cloud to upgrade existing applications, provide greater flexibility and partner with ISVs, SaaS vendors and fintechs. However, as technology continues to evolve, it introduces vulnerabilities that could endanger them as well as their ecosystem partners. This has tightened compliance needs in an industry that’s already heavily regulated.
Financial institutions often opt for standard, quick-and-easy upgrades without fully assessing all the opportunities. While many take the other extreme by investing heavily in a rip-and-replace approach in their haste to modernise. Following either path increases the risk for the business. As digital infrastructure becomes more complex, businesses must avoid falling victim to the Frankencloud construct, which is a set of cloud deployments that are so disconnected it is difficult to navigate and nearly impossible to secure. The Frankencloud opens the door to third-and fourth-party risks creating blind spots that bad actors can exploit.
It is therefore imperative for financial institutions to have a holistic view across their entire infrastructure, partner with the right technology solutions providers and build a team equipped with the latest cloud skills.
The right cloud strategy for financial institutions
There is a strong correlation between hybrid cloud and digital transformation. Absence of a proper hybrid cloud strategy is a major challenge in realising the full potential of digital transformation. Some of the other challenges include simplifying the crowded IT landscape many organizations operate in, ensuring the right talent and operations are in place, integrating separate cloud security domains into a comprehensive game plan to defend against cyber adversaries and finally, maximizing the return on cloud investments.
A hybrid cloud approach can smoothen the path to modernisation while enabling strategic competitiveness. Here, financial institutions get to choose the right environment (combining on-prem, private, and public cloud) that addresses their industry-specific workloads, security and regulatory stipulations.
The first step is to align intent and business vision while fully understanding their need to modernise. With this, financial institutions will be strategically prepared to make the most of their IT investments and remain competitive in the long term. They can leverage a wider gamut of tools and apps to improve cost efficiency, productivity, establish a ready platform for innovation and reach customers in a phased manner. They can also tailor the technology environment to suit individual growth strategies and future business challenges. This forms the basis of progressive modernisation. An open hybrid cloud approach also enables multivendor portability while maintaining security at the core. This will help financial institutions to adhere to regulatory guidelines mandating multivendor portability for interoperability and addressing vendor lock-in problems.
While most Indian financial institutions have begun their transformation journey (some further ahead than others), they need to relook at their cloud strategy that supports modernisation in progressive steps. A hybrid cloud approach will provide significant benefits in the areas of:
- Greater infrastructure efficiency through optimization of the spend across the multi-cloud environment with more granular control over resources
- Improved regulatory compliance and security by drawing best-of-breed cloud security and regulatory compliance technologies and implement them across all environments in a consistent way.
- Improved developer productivity by expanding the adoption of agile methodologies that enable development teams to develop once and deploy to all clouds.
- Overall business acceleration which includes shorter product development cycles and time-to-market; faster response to customer feedback and stronger integration with partners to deliver new products and services.
In 2023 and beyond, the hybrid cloud will become indispensable to not just the financial services sector but almost all other sectors. Once financial institutions achieve hybrid cloud mastery, they will unlock innovation at an entirely new level while ensuring their environmental, social and governance (ESG) goals are met.