A recent worldwide survey on public cloud computing adoption
strategy in Banking and financial vertical has revealed that Banks and
regulators are concerned on the growing dependencies on the highly concentrated
public cloud service operators. The survey conducted on more than 1000 leading
Banking and financial services providers & regulators in France, UK
Germany, US, Canada, Hong Kong, Japan, Singapore and Australia showed that
little more than 80% are using the public cloud computing infrastructure for
some or the other key applications .
Regulators are concerned that over dependency of many banks
on the same cloud operators can lead to systemic risk if one of the cloud
operators were to go down for some or other reasons. The prominent banks in the
European region have expressed concerns about their lack of transparency in how
banks rely on a “concentrated” number of outside cloud computing providers
which are beyond the reach of the regulators in their Region.
To mitigate that systemic risk the Banking & Financial
institutions are considering hybrid & multi-cloud strategy to avoid vendor
lock-in . In fact over 80% of these financial institutions are considering a
multi-cloud & hybrid cloud strategy within next 1 year of time frame itself
. This will not only solve public cloud provider concentration issue but also
vendor lock-in concerns of financial institutions & regulators.
It provides these critical financial institutions, the much
needed flexibility to switch to alternate public cloud operator in case of an
outage to avoid any interruptions in the services. By using hybrid cloud, banks
are able to maintain and support their legacy systems while simultaneously
taking advantage of cloud technology.
A Hybrid Multi-cloud approach
The financial institutions and regulators need to ensure
controls and assurances on cyber resilience, risk management, transparency,
data locality and compliance. Banks & Financial institutions are adopting
hybrid cloud strategy for multiple use cases:
Manage ever growing data: Banks and financial institutions
have huge volumes of big data. With hybrid cloud, banks can store sensitive
data on-premises and move all the other data that has a lower risk in terms of
security to the public cloud. This will reduce the cost and complexity of
storing huge amounts of data in on-premises data centers.
Data analytics & Reporting: Banks move to hybrid cloud
as cloud computing offers Machine learning & Artificial intelligence
capabilities that provide insights into customer behavior, product efficiency,
cross-selling and upselling opportunities.
Information Security: With the help of hybrid cloud, banks
can ensure disaster recovery. Financial institutions can keep their production
environment in a private cloud and a recovery environment in a public cloud,
ready to spin up as and when required. In the event of a disaster, they can
quickly start the application in the public cloud, since the data is already
present there. Also, hybrid cloud architecture can be used for business process
automation (RPA) in client servicing (account payables , KYC etc ) and various
other reporting automation.
DevOps: With hybrid cloud, banks can leverage Kubernetes
services, microservices architecture, and various testing solutions that are
used for effective development and testing ( CI/CD pipeline ) of web and mobile
fintech applications.
Regulatory compliance: Hybrid cloud helps banks &
financial institutions comply to changing regulatory reporting requirements
(e.g. Capital Analysis and Review, Solvency II) in multiple operating
jurisdictions. Cloud-based solutions can help banking & financial
institutions conduct intraday liquidity and risk calculations, and mine trade
surveillance data to detect anti-money laundering and other fraud issues.
Migrating workloads to and from the cloud: Moving to the
cloud or back to on-premises is not a one-day task. So financial institutions
and banks can use hybrid cloud to check the optimal services and resources for
workloads by migrating applications to and from the cloud.
It is clear that additional policy measures are needed to
mitigate financial stability risks emanating from the highly concentrated
public cloud operators. The regulators across world need to take further actions
to avoid Banks & Financial institutions reliance on a very few public cloud
operators becoming a threat to the financial stability in their respective
region. The right cloud strategy fine tuned for specific business needs to be
deployed in the locations right for their business, while incorporating new
industry-specific capabilities.
Click here for the
original article.