While the public posture for cloud migration in financial services is one of caution and restriction, the word on the ground tells a different story. With names like JP Morgan Chase, Nasdaq, FINRA, and Capital One cropping up as cloud adopters, it has become apparent that there is more than meets the eye when it comes to the true rate of cloud migration in financial services. What is the true state of migration to the cloud and what are some of the key lessons for moving forward?
Lessons From Cloud Migration
First, the cloud market is already big and continually growing larger. According to research from Mordor Intelligence, overall public cloud market revenue will double from 2018 to 2022 and research firm MarketsandMarkets predicts that the finance cloud market will have a 24.4% CAGR from 2018 through 2021. Investment in cloud technology is clearly strong and expected to accelerate.
As this trend continues, several key lessons have begun to emerge. First, public cloud security fears are being quelled as real-world cases are generally finding that the addition of public cloud enhances, rather than detracts, from the overall security posture of the enterprise. The conversation has shifted from “is the cloud secure?” to “how do we move to the cloud securely?”
Second, the mantra of “cloud first” is proving to be challenging in practice for incumbents in the financial services space. While emerging fintech companies are usually software-defined at inception, a “before cloud” entity needs to confront the reality that not all existing systems and processes are well-suited for cloud migration, at least not in their current forms. In order to maximize value, incumbents must thoroughly ascertain cloud-suitability, cost-effectiveness, operational risk, and the business benefits of migrating each system or process to the cloud.
Third, companies are discovering that analysis should extend well beyond “what” to migrate and into how to enhance legacy system architecture and delivery processes during the cloud migration. The enterprise often fails to derive value from a simplistic “life and shift” approach. In order to maximize returns, companies must instead apply a “move and improve” approach. In this approach, companies carefully evaluate investments in managed solutions, containers, and end-to-end automation for each system or process being migrated. If they make educated investments along their cloud migration journey, they can leverage both favorable digital advancement and market position to stay competitive against their cloud-native rivals.
The Catalyst for Change
Perhaps the most telling statistic arguing for the inevitability of cloud adoption in financial services is external to the enterprise. Specifically, 2018 was a banner year for investment in new fintech ventures, with total funding of $39.6 billion, an increase of 120% from the previous year. These investments are directed to companies looking to disrupt incumbents in financial services markets, and the platform from which this disruption is launched is, not surprisingly, the cloud. Viewed this way, the cloud becomes the vehicle which incumbents must either embrace to maintain their market share or choose to ignore and face the prospect that their relevance will be challenged. It appears that cloud adoption is critical to financial services, just as it is for every other business and industry.
Download our latest white paper, “Securing PII Data in the Cloud for Financial Services,” to learn how the cloud can improve your security posture & provide other benefits. Are you interested in discussing how your financial services organization can migrate to the cloud with one of our experts? Contact us now.