Using Cloud Technology to Enhance Financial Services Agility, Efficiency, and Costs
Cloud computing is gaining popularity for financial services looking to transform their risk management organizations to be more efficient, more secure, more cost-effective, and more adaptable to future needs.
What is Financial Risk Management in the Cloud?
Moving financial enterprise operations to the cloud enables resiliency and risk reduction that isn’t found in on-premise infrastructures. When environments are cloud-hosted, companies can move more rapidly when there is an outage or disruption, versus on-premise outages and disruptions, simply because the issues are easier to identify and rectify.
Cloud technology makes accessibility easy and convenient to employees since financial systems can be reached from any location across any time zone; on-premise systems require users to be physically tethered to the database computers.
Having a cloud environment streamlines updating and launching of services and maintenance, minimizing disruption to clients.
Affordable Computing Costs
Cloud technology can transform financial management departments into efficient powerhouses, lower overall operational costs, and improve financial service delivery.
On-premise infrastructure costs are traditionally associated with hardware acquisition and required maintenance; necessary on-site IT staff; and, of course, the expense for the physical space required to house computer equipment. While the cloud’s well-known “pay-as-you-go” model may sound like the superior choice to reduce operational costs, moving to the cloud does have its own set of expenses. According to a Gartner research note on developing a “Business Case for the Adoption of Public Cloud IaaS”:
“Cloud services can initially be more expensive than running on-premises data centers. [However] cloud services can become cost-effective over time if organizations learn to use and operate them more efficiently.”
Cloud computing can become more cost-effective over time because it offers modern and flexible capabilities without large upfront capital investments, a more streamlined implementation, and minimal upkeep for IT staff.
If your FinOps organization has an on-premise technology infrastructure, you need experienced IT employees with the know-how to effectively manage and maintain the equipment. Whereas with cloud, there’s a cost reprieve by enabling intuitive, user-friendly interfaces and applications that don’t require hardware expertise. Cloud solutions enable more flexibility and virtual access, so organizations can significantly reduce, and possibly eliminate, in-house IT staff to manage the applications and systems.
The scalability of the cloud can also enable financial management services to reduce or even eliminate silos that have been created by legacy systems that no longer communicate between departments. Cloud technology enables 24×7 availability, potentially limitless storage capabilities, and optimized system performance, enabling employees to save time on daily tasks by having quick access to the information they need.
Elasticity and Operational Efficiency
Implementing cloud technology within a financial institution enables employees to take advantage of more intuitive interfaces and solutions, leading to enhanced reporting and improved customer service capabilities. Financial services organizations can grow quickly and synchronize processes between departments, including billing, finance, customer support, payroll, HR, regulatory, and so on, when running in the cloud.
The cloud also benefits financial risk management thanks to productivity-boosting mobility. With any time, anywhere access, employees can use the same applications and have the same capabilities as in-office employees regardless of where they are located. An on-premise financial infrastructure can limit remote accessibility and the ability to process data in real-time.
Improved IT Security
Financial services organizations contend with compliance-driven and regulatory environments and maintaining data security is a crucial component to the infrastructure, whether it is on-premise or in the cloud.
Your organization needs to have a complete understanding of its current on-premise security capabilities, including vulnerabilities, to adequately compare to cloud technology options.
Leading cloud providers like Amazon Web Services (AWS) and Microsoft Azure offer native security tools to help you manage your organization’s cloud infrastructure. However, the cloud’s shared responsibility model means you’ll share security responsibility with your cloud provider to anticipate and handle security risks effectively. It’ll be up to your organization to manage a significant portion of your own data security in the cloud. Implementing an experienced cloud IT team, utilizing a Managed Service Provider (MSP), or directly using a cloud management platform provider who can implement security standards proficiently is critical.
Hybrid Infrastructure: Mixing Cloud and On-Premise Solutions
Since your goal is to optimize your on- and off-premise environments, you may end up moving all applications to the cloud, but it doesn’t have to be an all-in or all-out decision.
When first considering moving your financial services organization to the cloud, having a hybrid infrastructure—a combination of on-premise and cloud options with public or private access—can give you variety and flexibility of legacy and new hardware and/or applications across departments.
Your financial risk management organization may want to start cloud implementation slowly and simply move a single application to the cloud. Or perhaps roll cloud integration out in a certain business unit or department and build on that as you need to scale, or as resources become available. Considerations must be made for the age and costs of the existing infrastructure and amount of data being processed—versus the improved bandwidth speed and data processing capability of cloud infrastructure.
Your cloud management solution provider can help you determine what on-premise environment is best to upgrade initially, what applications make the most sense to move to the cloud, and which solutions can remain on-premise, creating the hybrid infrastructure that works best for your group.
Pursuing an aggressive implementation that moves your entire on-premise infrastructure to the cloud at one time may give your organization the best results; it may also have the highest initial cost. However, the cloud offers significant financial benefits in the long term by eliminating hardware purchase or lease expenses, reducing the cost of data storage space, reducing or eliminating equipment maintenance fees, personnel expenses, and streamlining processes and tightening securities to minimize costly breaches. Financial benefits include lower Total Cost of Ownership (TCO), predictability of long-term cloud technology costs, and if minimal upfront investment, depending on your implementation decisions.
Migrating Your Financial Services Business to the Cloud: Keys to Successful Migration and Maintenance
Whether you choose a gradual migration or a complete one-time transition to the cloud, the following are some steps to successfully move from on-premise to the cloud:
1. Deliberately develop the right strategy for your organization
- Perform a definitive, thorough assessment of current infrastructure
- Decide which applications or solutions to move to the cloud
- Address operational concerns, such as data security and information ownership, and retain data integrity throughout migration
2. Secure the right skills and resources needed to perform the migration to the cloud
- Consider disaster recovery abilities
- Consider the ability for future expansion
- Consider using a Managed Service Provider that specializes in migration
3. Encourage adoption within the financial services organization through a controlled, well-communicated message to all FinOps stakeholders, including the CIO, C-suite executives, and board members
4. Craft a mission statement to guide the implementation; share the objectives of the migration, relevant metrics, and so on
5. Migrate from on-premise to cloud in stages
- Deploy some concepts or pilots
- Remain aware of how deployment will change day-to-day operations
- Manage the impact on employees affected before full implementation
Minimize Migration Overwhelm
Migrating to the cloud can be daunting. Post-migration maintenance can be even more so. But you don’t need to figure it all out on your own. Invest in an innovative cloud management solution to work with that has hands-on experience and specific solutions catered to the financial services industry.
By migrating your applications to the cloud, you’ll be able to reduce personnel costs around IT, capital equipment, physical space, maintenance, and more. You’ll gain an increase in financial application efficiency and accessibility, lower overall IT costs, and a positive boost to the organization’s and company’s bottom line.
Moving your financial services solutions to the cloud also enables your Finserv organization to:
- Improve service delivery
- Lower expenses
- Adapt to ever-evolving consumer expectations, changing business models, and emerging technologies with minimal disruption
Isn’t it time for your financial services organization to transition to the cloud?
Best Practices for Your Financial Services Organization
CloudCheckr keeps an eye on 600 best practices to optimize your financial services cloud costs, maintain your security and compliance goals, and improve your operational efficiency over time. Schedule a private demo to see it in action