Australia's banks are faced with a shifting paradigm: to keep up with the rate of innovation and to deliver a better customer experience, they must become more nimble in their software development processes and operations.
With the speed of innovation becoming more crucial than ever, leveraging a multi-cloud ecosystem to manage the flow of data and applications across data centers and cloud platforms will empower banks to remain competitive in a fast-evolving market.
For IT and data security reasons, as well as for regulatory compliance, banks have, in the past, followed a closed approach to their systems and customer data. In fact, up until recently in Australia, APRA had outlined rather prudential cloud computing standards primarily due to customer data sensitivity.
APRA's regulations have since relaxed as the technology surrounding cloud environments has improved and become more secure. But how should banks ‒ many still restricted by their dependency on legacy IT systems ‒ utilise multi-cloud infrastructure to undertake modernisation and enable efficiency, scalability and flexibility?
The problem with legacy
It's old news that legacy infrastructure systems stifle innovation. Outdated IT solutions are time draining, inflexible and difficult to change. Developers find themselves ‘keeping the lights on' rather than delivering on immediate business demands, let alone enabling innovation for the future.
If IT departments could spend less time ‘keeping the lights on' they could devote more time to creating value, reducing costs and increasing revenue. Banks need to be more fluid with their uptake and deployment of new technology, but, of course, it takes time.
Transitioning to a hybrid cloud solution, which involves a mix of private (both on-premises or hosted) and public cloud environments, in order to achieve greater scalability and integrated communication between siloed systems is a step in the right direction for banks without a heavy lift-and-shift.
When used in conjunction with open source tools like Kubernetes or Cloud Foundry, it can ease the painstaking process of deployment.
Without the constraints ‒ in time and cost ‒ imposed by legacy systems, developers are freed up to then focus on initiatives, such as AI, that would drive revenue, innovation and improved customer experiences, thus bringing banks into the future.
Investing in a single cloud isn't sensible in today's dynamic economy. When it comes to cloud ecosystems, you can't necessarily predict the unknown, but you can prepare for it.
Having more than one cloud vendor affords a bank some degree of protection against the unknown, such as potential outages. It also affords banks some commercial leverage to take advantage of spot instances to get better pricing options.
A multi-cloud strategy also mitigates the risk of vendor lock-in. It will position banks to better take advantage of the best features and services from each provider that will make the most sense for their specific business needs.
Because Amazon was the first to bring its cloud services to Australia, many banks have offset their workloads to AWS. However, with the entrance of Microsoft Azure and Google Cloud, these providers have differentiated themselves based on their specialised services and features that can be applied to different business' needs.
Google, for example, offers arguably the best array of data analytics and artificial intelligence tools, including TensorFlow. But if your goal is to replatform some legacy windows applications and bring them to the cloud while maintaining regulatory compliance, as many banks might be looking to do, then Microsoft Azure is a good option to consider.
The future of banking is in the clouds
There's another major benefit in driving a multi-cloud approach in banks: multi-cloud strategies mean greater flexibility and agility to respond to the fast pace of modern business needs at a lower cost.
Due in part to security concerns, banks have been slow when it comes to cloud adoption. Yet a report from PwC found that 52% of asset management CEOs believe that cloud computing will be strategically important to their organisation.
In the face of growing pressure from within the industry, for both big and small-size banks alike, the cloud is a sensible way to transform and reshape operating models in a more cost-effective way.
Australia's banking landscape will continue to radically change in the coming years, and laying the foundation with the right cloud providers will be paramount to future success. With a multi-cloud approach at the heart of their infrastructures, banks will be in a better position to not just keep up with innovation and exemplary customer experience standards, but to drive them.