Cloud migration is at the top of most financial institutions’ technology agendas, and although its implementation is still at an early stage for the majority of the sector, it is gaining momentum.
This change in trend towards cloud computing on behalf of banks is one of the conclusions drawn from a recent survey conducted by the McKinsey consulting firm, which states that “only 13 percent [of financial-services leaders] had half or more of their IT footprint in the cloud. But migration to the cloud is gathering momentum. More than half of the survey respondents—54 percent—said they expect to shift at least half of their workloads to the public cloud over the next five years”.
In this respect, Ron Shevlin, Senior Contributor for Forbes magazine, references in his article “The Two Things Banks Get Wrong About Cloud Migration”, to the Cornerstone Advisors’ 2022 report “What’s Going On in Banking”, which confirms this technological shift towards the cloud and asserts that “two-thirds of US banks and credit unions already have—or expect to have by the end of 2022—apps running in the cloud”. This article explains how migration to the cloud has become one of the most important challenges for banks today: “the challenge is transitioning to the cloud and replacing systems and applications that could increase efficiency and effectiveness—and maybe even provide competitive advantage—by being in the cloud”.
Cloud migration, a priority for the financial sector and for Latinia
“Banks must make cloud adoption a priority in order to advance their digital transformation and, above all, to remain competitive in a financial industry in which fintech services and digital native companies are increasing their market share,” says Marc Alcón, CEO of Latinia. “At Latinia we have already developed and implemented cloud migration projects with several of our clients, and we will continue with this strategy, convinced of this technology’s potential”, he concludes.
McKinsey is also clearly committed to encouraging the financial sector to undertake this technological challenge as a fundamental part of its digitalization process: “institutions that do not define an overall aspiration and put in place the right success factors to achieve it often fail to capture value from the cloud.”
“How rapidly financial institutions can migrate to the cloud determines how fast—and effectively—they can complete their digital transformation”, says Ron Shevlin for Forbes.
How to accelerate the migration to the cloud?
According to the consulting firm McKinsey and based on their experience working with dozens of financial institutions on their migrations to the cloud, banks should pay special attention to three shifts to accelerate their cloud migration:
- Strategy and management: the advantages that the cloud can bring to the company must be shared with the entire organization and the discourse must be articulated in terms of benefits such as scalability, efficiency and elasticity. As McKinsey explains, “institutions can place less emphasis on the theoretical value of cloud and use the business case as a practical guide to real value, which makes it easier for the organization to understand and support the goals of a migration.”
- Business-domain adoption: business and technology units must function in a synchronized and cross-functional manner. McKinsey recommends to “start the migration at the domain level—a complete product, service, or function, such as the checking suite or security foundation—rather than by opportunistically moving disparate applications.”
- Foundational capabilities: one of the most important actions when designing a cloud migration strategy is to automate as much as possible. “Because the cloud is so dynamic—new servers can come online as needed, and capacity can be extended to meet unforeseen spikes in usage—automating finances can help to flag or adjust financial issues to keep costs in line with the business’s goals”, explains the consulting firm in its report.