5 Ways Financial Services Firms Can Boost Their Cloud Outcomes

3 mins read

For most financial services firms, the migration to the cloud is far from done. Four out of five banking executives said they intend to push the share of core workloads migrated to the cloud from 7% to beyond 50% in the next two to five years, according to research from Accenture released in January. Yet the toughest challenges lie ahead as barriers around legacy infrastructure, security and compliance risks, and a lack of updated technical skills continue to hamper firms’ efforts.

While banks, insurers and capital markets players remain committed to moving key workloads and applications to the cloud, the process is complex and requires a coordinated strategy to be successful. To achieve their desired outcomes, these organizations have to first overcome key pain points that are hindering their progress.

Based on my experience working with financial institutions, there are three reasons why many struggle with their core system migration:

  1. Executives are concerned that cloud vendors won’t be able to match the superb resilience that their mainframe gives them;
  2. The applications running on the legacy infrastructure tend to be old and need to be modernized as part of the migration process; and
  3. It’s hard to get a short-term cost benefit until you move everything off the mainframe and decommission it.

As an organization’s cloud migration progresses, the challenges become greater. Despite the experience gained from piecemeal efforts, the complexity and sheer scale of core workload migration amplify most if not all of the barriers listed above.

One cause for optimism is that the more an organization commits to cloud, the more likely it is to achieve the outcomes it expects. Across all industries, Accenture’s research found that 47% of firms that are heavy adopters of cloud are fully achieving their expected outcomes, compared with 36% of moderate adopters and 21% of low adopters. As a growing number of financial services firms ramp up their cloud adoption levels they can reasonably expect their satisfaction to grow in tandem.

Another encouraging finding is that the outcome achieved by most organizations is business enablement. This spans capabilities such as data, analytics, AI and innovation, and promises the greatest value upside: enhancing customer engagement through digital capabilities and boosting revenue as a consequence.

At the other end of the scale is cost savings, the cause of most cloud adopters’ greatest disappointment. The returns are taking longer than expected to filter through, partly because the transitions were isolated events but, more importantly, because an incomplete migration results in avoidable redundancy.

Ultimately, to maximize value and accelerate cost benefits, organizations need a more coordinated enterprise-wide migration strategy. Here are five steps they can take:

1. Use the full power of the cloud to gain a business advantage. Prioritize use cases according to time-to-value and align investments with emerging business strategies.

2. Unleash new value from data and AI. Data excellence is the new competitive frontier, for financial services as well as most other industries. Success will depend on the ability to draw insights from across the enterprise that enable employees to work smarter and more efficiently, customers to interact more meaningfully, and operations to become more automated. AI can play a role in accelerating the cloud migration as well.

3. Design and orchestrate across the continuum of cloud, which encompasses a powerful range of capabilities from public to edge and everything in between. This continuum allows the cloud to be regarded not as a single static destination but as an operating model and a strategic enabler. Success hinges on the ability to adopt the right mix of capabilities and services that the continuum offers.

4. Discover new opportunities. Technology alone won’t sustain cloud value. To thrive in the cloud, businesses need their people to reimagine their operating model, processes and products. They need to explore and capture the new possibilities gained by shedding the constraints of the legacy system. This ranges from ways of working and engaging customers, to modernizing organizational culture.

5. Strive to master cloud economics. In an environment of increasing cloud complexity, firms can gain a lot by controlling cloud spend. This requires not only transparency and oversight, but also shifting the conversation from the cost to the value of cloud. Both perspectives are necessary for a complete, balanced picture.

None of these are easy, and the bad news is they’re all necessary if firms are to close the gap between their expectations of the cloud and the outcomes they achieve. There is understandable executive impatience to realize the anticipated outcomes, but ultimately the results are hard-earned.

Many financial services companies, though, are achieving terrific milestones. One example is Capital One, which has been one of the leaders in cloud migration for the industry. The bank left its data centers behind and shifted onto the public cloud to help create superior and more personalized customer experiences.

Cloud has shown repeatedly that it can deliver powerful outcomes—certainly efficiency, but more importantly better customer engagement, the enablement of innovation and greater agility. The trick is to identify why it sometimes falls short or takes too long and to take pre-emptive steps to ensure these obstacles are eliminated or side-stepped.

Ultimately it takes a commitment from leadership to align the business with its cloud goals and show a firm determination to follow through.

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