The Pandemic, Consumers and Business Realities Drive Banking to the Cloud
The Global Financial Services Industry has been in the midst of massive change across three different dimensions – competition, regulation, and digitization. The common thread across the three dimensions is the need to drive change via technology. Whatever the actual approach to cloud, it is clear that due to changing customer preferences, post-pandemic realities, and evolving business models, the banking institution will change dramatically every few years going forward.
- First, across different domains of the industry – such as Capital Markets, Retail Banking, Hedge Funds, Wealth Management, Payment Processing, Financial Exchanges, etc – a wave of Fintechs and agile competitors are upending business dynamics.
- Second, Regulators are increasingly focusing on financial risk (credit, market, & operational) & compliance (AML & Fraud Detection).
- Third, a wave of digitization is causing financial services firms to increasingly imitate the FANG (Facebook, Amazon, Netflix, Google) of Silicon Valley. Cloud, AI, and Machine Learning – it is the deployment of these technologies across horizontal functions such as trade execution, backtesting, client servicing, capital optimization, consumer/corporate credit decisions, risk measurement, client onboarding & financial advisory, etc. that will separate the winners from the losers in the decade to come.
On the other hand, leading cloud providers such as AWS to provide financial services customers with secure and resilient infrastructure and a whole range of services to modernize their infrastructure and applications. Storing customer data, transactions and other advanced applications on the cloud is no more an issue as it was a few years ago. Banks can focus on experimenting and evolving to “as a service” models to increase revenue as well as monetizing on their data assets as opposed to just heavy lifting in their data centers. As Financial Services IT Operations support large-scale development and production environments, their challenges are getting harder and harder. IT is being asked to support the organization’s desire to improve agility and time to market, developers are looking for a more cloud-like experience, and CFOs provide additional pressure to reduce the cost of infrastructure management across a mix of systems, technology stacks, and clouds that are growing in numbers and complexity.
So what specific areas can the cloud help Banks of 2021?
Cloud Delivers Value in Nine Key Business Impact Areas
The key business use cases tackled from a cloud standpoint in Banking are depicted in the below illustration following –
- Trading and Settlement to enable firms to deliver full trade lifecycle platforms
- Stock Exchanges to help with trade execution and surveillance
- Customer 360/Analytics in Retail & Investment Banking
- Open Banking in the EU
- AML and Compliance
- Edge Compute at Bank branches
- Risk Management calculations
- Portfolio and Wealth Management platforms
- Payments
The common thread to all of the above use cases are –
- The need to grow or shrink compute and server capacity in realtime
- The need to provide complex services – both system and application-oriented
- The need to meet demanding business SLAs for uptime, performance, and responsiveness
- The need to unify data silos & reduce duplication and increase governance
I have added helpful links to both deep-dives on the above business areas as well as reference architectures as previously covered in this blog.
https://www.vamsitalkstech.com/architecture/a-reference-architecture-for-the-open-banking-standard/
https://www.vamsitalkstech.com/aml/the-business-case-for-big-data-in-financial-exchanges-22/