The shift towards digital is picking up pace, especially with the pandemic-induced momentum. As one of the primary enablers of digital transformation strategies, cloud continues to gain prominence across industries, attracting a significant share of IT spends by enterprises across the globe. The story is no different in Australia. The market for cloud computing in Australia is expected to touch $14.1bn in 2025, according to GlobalData.
The highly regulated banking industry has so far, been cautiously optimistic about cloud and has been treading softly – given the concerns around security, compliance, and skilling. Yet, with changing customer preferences and an evolving competitive landscape, with new-age cloud-native FinTechs in the fray, banks have begun to get a move on from monolithic systems and are rapidly embracing cloud.
The cloud impact
With cloud, banks get a flexible and scalable IT infrastructure with agile foundations, which empowers them to keep pace with emerging requirements, while taking new, personalized products to market with speed. The dynamic scaling and elastic load balancing capability of cloud help banks prepare for peak transaction loads during seasonal spikes and always delivers high performance without the burden of operational costs pertaining to maintenance, upgrade and management of infrastructure. Besides, by embracing cloud, banks can also get to gain from leveraging new-age cloud native AI, analytics and more such technologies.
Cloud deployment models - Scale vs Security | Public vs Private
While there is consensus that cloud adoption is the future, there are different perspectives, approaches, and models to consider, with each having their own merits and demerits.
While the public cloud offers scale, flexibility, on-demand computing and elastic scaling, private cloud offers greater capabilities around security, control, compliance, and customization.
Conventionally, large and mid-sized banks have opted for the greater control associate with private cloud. However, they have now started moving some of their non-mission critical applications to the public cloud. As the offerings by cloud providers mature further and the concerns around security starts to fade away, these banks will do well to start phasing mission critical applications as well to public cloud.
In our recent research on cloud adoption, 41% of the banks covered had chosen private cloud, 28% had gone with a public cloud, and the remaining 31% were using a bit of both. Whatever be your preference – public, private or even a hybrid cloud model, Infosys Finacle allows you to choose digital banking solutions from its broad suite of products and deploys it on your preferred model flexibly to suit your business requirements.
The hybrid cloud proposition
Hybrid cloud brings the best of both worlds and delivers a scalable, efficient, and future-proof modernization strategy. The only question is, what is the most ideal configuration or mix that will deliver the most value.
As more and more banks adopt the hybrid cloud model, the key challenge will be the identify the right mix of applications across on-prem, public and private cloud. While the popular perception is that everything should eventually move to public, there are many situations where the limitations of public cloud, such as latency, governance, data residency and other compliance issues, rule it out, and private cloud is what works.
Moreover, most of the legacy applications banks today have, are not built for cloud and need to be maintained on-premise. While there are strategies banks are taking to get these applications cloud-ready (re-factoring, re-platforming and more), there is a long way to go. Hybrid is the way forward, at least for the foreseeable future.
A Multi-cloud Strategy for Optimal Performance
While banks must embrace hybrid cloud and crack the right configuration of application across private, public, and on-premise, there is an even greater value in the move towards a multi-cloud approach. Here, banks work with multiple cloud vendors, leveraging their unique strengths and differentiators based on the applications and use-cases at hand.
For example, Australia Military Bank (AMB), which is powered by the Finacle Digital Banking Solution Suite, including core, origination, payments, and channels, is deployed via SaaS on a private cloud. The National Australia Bank (NAB) is another example; the bank has created a multi-cloud framework that allows it to run its most critical operations on two different clouds, thereby, enabling it to serve customers better while ensuring safety.
As the cloud landscape evolves, more and more cloud providers are starting to differentiate themselves based on a portfolio of managed services and other innovative enablers. For instance, cloud service provider (CSP) A has a stronger analytics capability, CSP B has better security, CSP C has a stronger blockchain proposition. Moreover, with the dynamic nature of the technology landscape and the evolving regulatory framework, it’s important for banks to balance their risk. For this, it is important that they have a choice to switch from one CSP to another seamlessly as per their needs and the market demands.
Adopting a multi-cloud approach can free banks from vendor lock-in issues, thereby allowing them to tap best-in-breed services for all applications. It also gives them more leverage when it comes to negotiating with cloud providers. Moreover, it helps banks to prepare for the future where the regulatory environment too might require banks to distribute their data across different cloud providers to meet emerging data security and residency requirements.
Preparing for a hybrid multi-cloud future
While a hybrid, multi-cloud approach offers a multitude of advantages, there are a host of complexities associated with this setup which banks need to navigate. Having data and applications spread across different environments and the associated heterogeneity, poses its own set of challenges.
Data replication is a concern with hybrid cloud. Applications perform best when they are closest to their datasets. In the hybrid model, we don’t have a mature way yet of replicating data across different cloud providers. This poses a significant challenge towards adopting a seamless hybrid cloud model with interoperability. Moreover, the lack of standardisation coupled with limited integration capabilities raises specific concerns.
Therefore, banks need to explore new ways of working that focus on APIs, event-driven architecture, and integration capabilities. As banks invest in digital transformation, banks must look for cloud-native, cloud-agnostic applications that facilitate an easy transition to multi-cloud environments. This gives them the freedom to choose vendors and data configuration of their choice enabling them to optimise their operations. They must also embrace containerized deployments to enable seamless and automated application development, improving efficiency. Infosys Finacle has intelligently and systematically invested in building its product suite, incorporating assets that enable banks to embrace this digital journey seamlessly.
As banking continues to evolve in line with changing customer expectations, banks must focus on ensuring that their technology infrastructure allows them the capabilities and freedom to deliver the best possible experiences. A move towards hybrid multi cloud is not only the right step forward, but also absolutely necessary at this stage of banks’ digital journeys.
About the Authors:
K R Venkatraman
Head Product Architecture, Infosys Finacle
K R Venkatraman (KRV) brings over 28 years of global technology experience in international banking and technology transformations. His experience spans multiple core banking vendors, start-up ecosystem and experience with clients through their digital transformation journey across multiple markets globally.
In his current role, KRV is the chief technical architect of the Finacle suite of products. He is responsible for defining and executing the technology strategy for the products. He provides technical leadership to our software development teams. He has also been leading the technology transformation journey of Finacle into a cloud native product. He has been working along with Finacle architecture and product engineering teams in introducing contemporary architecture into our products in a pragmatic manner.
Theo Albers
AVP & Head of Business – ANZ, Infosys Finacle
Theo heads the business for Infosys Finacle for the Australia and New Zealand market, supported by a team comprising of sales, business consulting, pre-sales, delivery and marketing. He comes with a strong technical background, and ample experience in complex multi stakeholder strategic delivery programs. From his many years of experience Theo has good knowledge of banking software functional capabilities, ability to design solution offerings and services to support customers strategic objectives by applying technology to address real world problems.