Just like many companies in other sectors, financial service companies need to compete strongly in the digital and online space. Consumers increasingly want to use a range of financial services from any device and from anywhere. Digital transformation strategies and initiatives are underpinned and enabled by cloud and cloud-native technology strategies. This article presents some key reasons why financial services companies should consider a cloud-native strategy.
(For clarity I am referring to cloud native platforms and cloud-native applications in the broadest sense.)
Speed to Market
Many large financial services companies have large legacy technology estates to look after, and those environments are typically more rigid than cloud-native technologies and harder to change. Financial services organisations must embrace new cloud-native architectures that they can change rapidly in line with changing demand from customers for new and improved online experiences.
Ability To Scale Cost Effectively
Building scale using traditional IaaS and Virtual Machine infrastructure and legacy tiered applications stacks has proven to be expensive, especially when one considers all the environment copies that often need to exist across data centres (e.g., test, development, QA, production, disaster recovery).
Cloud-native platforms and application stacks, if designed correctly, benefit from modern scaling (vertical and horizontal) features and have a lower total compute requirement and footprint. With the right design, companies can achieve large platform scale at a much lower cost point and often with greater platform stability.
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Security And Compliance Improvements
Using modern cloud-native technologies brings about a new approach to securing platforms and keeping them compliant, utilising modern architecture, tools and software. It also demands a software-defined approach to building infrastructure using great tools like Hashicorp Terraform.
A cloud-native approach demands a fine grained and layered approach to security rather than relying on old methods of simply securing the outer shells of a technology estate. Because these platforms are built with code, it is possible to quickly reduce human error providing there is a rigorous approach to managing the IaC (Infrastructure as Code) base.
Keeping platforms compliant from both a security and best-practice configuration standpoint is easier to do when systems are deployed and managed through their life cycle in a much more systemic way. Reducing the size of the IaaS estate minimises the attack footprint as a result of not having to manage thousands of operating systems and a variety of versions. Moving a proportion of the technology estate to a more stateless configuration also improves security posture. These environments are also easier to rebuild in a crisis (e.g., Ransomware attack).
Ability To Invest In Modern Tech
Many financial services organisations often boast larger technology budgets than their counterparts in other sectors. Over the next few years, our industry will see a significant shift towards using more cloud-native technologies, including containers, Serverless, PaaS, and SaaS.
There is a cost of change for businesses to transition to these modern methods. I am sure that much of that investment will be returned in the mid to long term through reduced overheads and improved business agility, however getting these modern architectures built right demands the right level of investment.
Many businesses across various sectors may struggle to make the upfront investment to get the architecture and designs right. Successful financial services organisations are likely in a category that can afford to invest and change more rapidly than other businesses and that’s a huge advantage to go and leverage.
Long-Term Competitive Advantage
In summary, the up-front investment required to adopt a cloud-native strategy is high, however by adopting a well-designed cloud-native strategy, financial organisations can benefit from large-scale, cost-effective platforms; they can improve the technology platforms security and compliance posture, making it easier to rebuild in case of a ransomware attack, and allows organisations to get to market quicker and provide innovative services to customers, meeting increased demand for new digital experiences thus gaining a competitive advantage in the long term.