When the COVID-19 crisis broke out, many FS firms that had planned to deploy digital business models across their organization over time were forced to do so overnight. Of those that did, many were surprised by the relative ease of the transition to cloud operating models and the benefits they realized. Now they’re working to keep pace with a surge of innovation that’s making cloud computing less a nice-to-have and more a business imperative. They’re also revamping their budgets to reflect the fact that the cloud is becoming less about bottom-line cost savings and more about driving top-line revenue growth and innovation.
For FS firms, the benefits of cloud are substantial: the ability to deliver business value faster and to innovate at scale, increased data processing (approaching real-time), unique customer experiences, greater business agility and the capacity for continuous transformation. But before you start to develop a plan, it’s critical to determine exactly the business outcomes that you want from the cloud. Continue reading for an overview of the challenges we’ve seen and five tips to help your cloud transformation go more smoothly.
While cloud transformations present major opportunities in the financial services industry, they also pose significant challenges. Here are a few reasons why some firms are struggling to make the transition:
Some financial services firms don’t fully understand the FS-specific requirements for successful cloud solutions. One reason this happens is that they opt to go it alone, perhaps signing up with a cloud services provider that doesn’t have deep knowledge of what’s required to build an FS cloud solution that delivers business value. Without a clear understanding of the process—from risks and regulations to customer expectations, from how the customer journey will unfold to how things might go wrong—a cloud transformation is less likely to succeed. For FS firms, successful cloud transformations hinge on data risk management. Financial institutions have been slower to roll out cloud because of concerns meeting regulator demands related to transactions, processes and managing customer information. Regulators and customers alike need full visibility on secure data risk profiles.
The rapid evolution of financial services, much of it enabled by the cloud, has been disruptive for some FS firms. Cloud transformations are making waves in multiple directions, from surfacing the right content in a moment to engage a customer to circumventing geolocational constraints to forming partnerships that provide unique propositions.
When data and applications move to the cloud, firms are naturally concerned about privacy and security, but many lack a clear understanding of the related issues that can arise. Responsibility for cloud security is almost always shared. Cloud service providers are responsible for securing the platform itself, but the task of keeping your organization’s data and intellectual property safe is up to you.
Cloud introduces new risks on several key fronts that should be governed and managed. Spotting and mitigating risks across data security, regulatory, technology, third parties, financial and other areas puts FS firms in position to better leverage their cloud computing initiatives.
Based on the shortage of key skills, financial services firms have to recruit as well as train in order to improve talent investment. To build the capabilities to deliver a successful cloud strategy requires new business processes, new skills and new roles. Fostering a more diverse workforce should be a top priority as you consider adding and subtracting roles. Plus, you may uncover opportunities to convert and upskill your current teams. Having a well researched, considered and carefully vetted plan for personnel changes is important to cloud success.
Here are five tips on how to migrate to the cloud wisely and help make your cloud transformation go smoothly.