By Harjott Atrii, Executive Vice President and Global Head, Digital Foundation Services, at Zensar
Traditionally, the financial sector has been a late adopter of cloud technologies, focusing instead on on-premise IT frameworks. However, the last year has seen an upheaval in the way IT is consumed across all businesses. Last year we saw global businesses across the BFSI sector come to an almost standstill. Those firms that were early adopters of digital were the only ones to remain customer centric for most part by staying operational. Furthermore, customer experience took centre stage as all users demanded the superior engagement offered by leading e-commerce firms.
Gartner estimates, the worldwide spending on public cloud will grow by 18.4 percent in 2021 to a total of 304.9 billion dollars, up from 257.5 billion dollars in 2020. Further, another Gartner report states that the proportion of IT spending that is shifting to cloud has increased in the aftermath of rapid adoption of the “work from home” model, with cloud projected to make up 14.2 percent of the total global enterprise IT spending market in 2024, up from 9.1 percent in 2020.
Moving to the cloud has multiple inherent benefits for the financial sector because of its ability to offer pay as you use, platform agnostic features, cost efficiency, business continuity, speed, agility and flexibility.
Recently, we helped one of our BFSI clients adopt Hyperconverged Infrastructure to deliver flexible, scalable, and easy to manoeuvre infrastructure. The client is a global Fortune 500 provider of risk management products and services headquartered in the U.S. They provide specialty and niche market insurance products across diverse insurance sectors and operate in over 20 countries. We were successful in delivering higher levels of availability and reliability with data-driven capacity planning, leading to a faster network service (for both on-premises and cloud) with migration to infrastructure. The business saw a significant reduction in Total Cost of Ownership, and a 70% increase in cost savings near the zero-touch operation of a multi-cloud solution using our in-house Artificial Intelligence for IT Operators platform.
I’ve found it extremely interesting to observe the growing interest amongst global financial entities, who are choosing to move to the cloud and adopt some key customer facing operations too. I believe this sector is realising that getting future-ready means adopting to the cloud and becoming a digital enterprise. The speed at which cloud services are adapting to sector specific needs is also helping by allowing organisations to make quicker and more justified decisions. Plus, cloud providers are adhering to creating regulation friendly offerings for the financial sector which is making it easier to deploy.
Taking ahead the example of the work we did for our customer cited earlier, the convoluted state of its technology was the biggest challenge that the customer faced. The organisation had a disparate technology landscape with its primary data-centre in the United States. A complex application landscape with fragmented on-premises, hybrid and public cloud footprints were impeding business agility and delaying the time to market of critical products and services. Additionally, there was a cost burden of managing sizable on-premise infrastructure.
The lack of the right technology needed to support a fully automatic Infrastructure as Code (IaC) private cloud offering, had given rise to a monolithic architecture driven by manual and time-consuming processes. The absence of automation and orchestration for its vast on-premise environment led to excessive manual intervention and a large number of human errors which in turn reduced the product release velocity for business users.
Below are some of the key benefits the financial sector can leverage when adopting to the cloud.:
Scale and speed
Cloud accelerates capacity and operational bandwidth, while doing so at a fast pace. Creating new offerings, taking them faster to market, while remaining within regulatory norms is now easily possible.
Superior customer experience
Customers are spoilt for choice when it comes to digital buying and experience. This was felt very visibly during the early days of the pandemic fraught with lockdowns etc. making digital the only way to transact. This has resulted in customers demanding better digital offerings and a simplified, easy to use experience when interacting with brands.
One of the biggest learnings from the global pandemic has been the need to be lean and efficient while running all businesses. The financial sector did feel the brunt due to its heavy reliance on maintaining the expensive on-premise frameworks. The return on digital is very visible for a financial entity looking at remaining competitive and wanting to respond timely to market dynamics.
The cloud enables businesses to launch products faster in the market and at a lower cost. The ability to apply sophisticated technology – such as analytics quickly – can transform an organisation’s ability to adapt and create products and services in response to market and competitive changes. This helps to maintain differentiation and competitive edge in a dynamic marketplace.
Scalability and flexibility
One of the most lucrative benefits of moving to the cloud is its scalability, given the sudden need to respond to market volatility. The recent global situation clearly underscored the need for scale at operations as well as flexibility to respond to changes effectively and efficiently. Cloud technology can support the financial sector by gaining customer insights with behavioural analytics so that every click and every tap on their offerings or website can be managed.
This sector is all about customer trust and secure operations. Security is at the core of all new cloud offerings. In fact, cloud security has matured to include sophisticated security measures and controls. Security and data privacy are some key concerns that impact adoption across this sector. However there have been strides in the manner in which cloud is designed to drive consistency and automation across the growing attacks and a heightened focus on security and data privacy features are integrated also. The best option lies in adopting a hybrid cloud model which complies with privacy regulations with secure protocols across public and private data.
While the above reasons do offer many reasons to move to the cloud, financial services have to keep their customers at the core while making this decision. Adopting a robust cloud strategy helps in not only enhanced customer engagement, but it also results in a more successful business model. A cloud strategy will certainly help in making a financial services business more resilient, dynamic, competitive and ready to embrace future opportunities, today.