Part 2

Blog: The cloud promises unprecedented agility, and the time to create a roadmap is now

October 26, 2020  |  OLIVER CHANG

When was the last time you used―or even thought about―a landline? 

You might be hard-pressed to remember, and you wouldn’t be alone. In many developed countries, tethered phones are nearing extinction. And a growing number of developing countries are leapfrogging over them altogether. These trends have led experts to predict the landline will completely disappear before the end of this decade.

The trajectory of the landline provides good context for the magnitude of the technological revolution. It took consumers more than a century to fully embrace the old-school corded telephone. By contrast, it took the iPhone―which many would argue was a tipping point for today’s technological ecosystem―little more than a decade to render the legacy phone all but obsolete. 

The comparison is stunning. This flattening of the technology curve has driven consumers’ seemingly insatiable appetite for on-demand, digital-first services. To avoid going the way of the landline, financial institutions must be adaptable, ready and able to move quickly to feed consumers’ ever-evolving needs. They must be agile. And today, agility is built in the cloud.

What can we gain from the cloud?
While adoption of the telephone required generations of infrastructure development, the cloud makes advancements possible today. Gone are the days when planning, building and introducing new technology had a three-year or even a 12-month horizon. Today, much of it is happening in real time. 

That’s been enough to convince many financial institutions to boldly go into the cloud frontier. The cloud levels the playing field, enabling financial institutions―regardless of size or sophistication ―to quickly adapt to evolving consumer and operational needs.

Financial institutions that embrace the cloud gain unprecedented agility by:

Utilizing centralized systems and tools to reduce the complexity of innovation.
Leveraging more accessible, flexible and cost-effective resources to accelerate innovation.
Eliminating the need for manual completion of tasks like software installations or patches to enable more frequent updates. 
Creating a more open ecosystem for partnerships to build new products, services or functionality and simplify the introduction of new capabilities.
Minimizing time spent on development, provisioning, testing and implementation to increase speed to market.
Gaining access to broader technologies than most financial institutions would have the resources to create and maintain.
Facilitating staff efficiency through the ability to refocus on core capabilities.

But how do we get there?
While embracing the cloud won’t require an infrastructure build like the one that powered the landline, it’s more complex than just flipping a switch. If you’re not yet on the cloud path, now’s the time to create a roadmap. The following steps can help you get there.

Step 1: Clearly define your primary objective for considering the cloud.
While the general case for the cloud is compelling, it’s critical a financial institution understand precisely what it seeks to gain from the cloud. Consider these scenarios:

Break the legacy chains. Are you looking to modernize or leapfrog your legacy environment? Open a pipeline between it and the cloud?
Accelerate innovation. Do you need to innovate more quickly? What innovations do you want to offer? Mobile apps? A more seamless digital experience? 
Enhance efficiency. Do you want to modernize manual processes? Give your staff more time to focus on core capabilities? 
Scale up. Do you need more computing capacity? Ready to lift and shift from a private to a hybrid model?
Consolidate. Are there too many data centers in your operation? Do you need to consolidate or make the function easier to scale or manage?
Replatform. Are you managing products that use a number of disparate legacy systems? Do you aspire to gain access to modular services you can assemble and disassemble as consumer needs shift? Is rebundling services or providing a financial hub for your customers part of your strategic plan?

Step 2: Start with a noncore capability and apply your learnings to the banking operation.
While you may not directly correlate a noncore system like human resources, travel or customer relationship management with the cloud, today’s solutions are cloud-based. Leverage learnings from use of these systems to inform your banking in the cloud strategy. For example:

How did management of the noncore system change the skills or expertise required of your workforce?
What training was required to ensure employees could effectively use the system?
How did security protocols need to evolve to protect information in the cloud?
How did you ensure compliance of the system?
What was learned about governance?
What guidelines or best practices were established for system implementation?
What approach was used to effectively manage vendors?

Step 3: Anticipate your consumption and the related financial profile.
Cloud-based services are implemented and priced based on the size of your subscription. To determine the right fit, you must first anticipate your level and type of consumption. Consider elements like:

Run rate and expected growth for metrics like transaction volume and processing capacity
Appropriate cloud model for your organization―private, public or hybrid―and whether you anticipate needing to change it in the future
Projected need for scalability, accounting for things like whether you may outgrow a private cloud model and need to transition to hybrid, and seeking cloud-agnostic providers that can lift and shift, if needed
Geographic distribution of your operation, as financial institutions doing business across borders or operating data centers in multiple countries have distinct needs when it comes to compliance and data sovereignty 

Step 4: Select partners that can deliver in a highly regulated environment.
No matter where in the world your financial institution does business, regulation is expanding, not shrinking. When selecting partners to support your cloud roadmap, it’s critical they’re able to navigate a highly regulated environment. Do your homework and carefully identify partners that not only understand the complexities of financial services but have effectively helped their clients navigate them.
Like the landline, the old-school legacy financial institution is an endangered species. We’ve only just scratched the surface of what the cloud can do for the financial industry. To gain the agility to compete in the modern banking environment, build and invest with the cloud in mind.

For more on this topic, I encourage you to read part one of this blog series, Cloud: The New Frontier in Banking. To learn more about how Diebold Nixdorf is enabling cloud-based strategy through cloud-native, cloud-first solutions with DN VynamicTM Software.

First appeared in FintechFutures

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