Challenges for investment banks 2017 (Part 7): Accelerating the Journey to Cloud

Beat Monnerat, Senior Managing Director of Financial Services for Asia Pacific; Owen Jelf, Senior Managing Director for Capital Markets; Accenture

This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.

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Historically, companies have built, accumulated and maintained layer upon layer of proprietary technology because other suitable options (those supporting highly differentiated capabilities) simply were not available. Despite the efforts of many of the best IT engineers in the industry, many capital markets institutions have been left with vast, in-house IT estates that have been patch-worked together and have saddled financial institutions with a huge cost burden to maintain. This is unnecessary today now that cloud computing has become a viable option.

Financial institutions know this. According to Accenture research 60 per cent of capital market institutions say that cloud-based entrants will challenge traditional industry models. If banks do not respond quickly, jettisoning legacy architectures and establishing agile IT, their cloud native competitors could drive a wave of disruption.

What is stopping firms from making changes? Security and regulatory concerns have been among the biggest obstacles to cloud adoption. While the Monetary Authority of Singapore has a well-defined framework in place for adoption of cloud-based outsourcing services covering both technology risk and outsourcing risk, other jurisdictions do not yet have an equivalent, making transformation a puzzle for the majority of firms operating in multiple countries.

However, there are signs of change. With the emergence of fintech and regtech providers, an increasingly collaborative stance exists between financial institutions which is gradually changing the posture of regulators; now, many start to see cloud as an enabler to re-thinking the process of regulation and compliance.

For most institutions operating models should be evolved to adapt to the cloud era. There will most likely be a shift of focus from managing infrastructure and building custom systems to automating, managing and consuming services from an ecosystem of providers and consortia. This may reduce the effort focused on operational, engineering and development and instead require banks to focus more in functional areas such as financial consumption management (to support pay per use and accurate charge back models) and business architecture to align business needs with relevant cloud services and cloud service integration.

The journey to cloud requires financial services firms to:


  1. Assess and define the cloud strategy, including a portfolio assessment of the processes, applications and data suitable for transition to a Business-Process-as-a-Service/Software-as-a-Service solution. Then, define the appropriate hybrid Platform-as-a-Service/ Infrastructure-as-a-Service strategies for all remaining in-house solutions.
  2. Define target cloud architecture and requisite target platforms, including deciding on private platform and hyper-scale cloud partners that could play within your cloud ecosystem.
  3. Create future-proof applications by migrating strategic proprietary applications from legacy architectures to Platform-as-a-Service containers (initially deployed to bank infrastructure and private clouds). This process could allow companies to fluidly redeploy IT solutions to public Infrastructure-as-a-Service and Platform-as-a- Service services as they emerge and mature over time.
  4. Develop a multi-speed IT operating model to support the bank's journey to cloud. This model should be catered to the organisational, architectural, governance and business engagement needs that could arise when introducing Anything-as-a-Service models alongside traditional, in house and bespoke delivery methods.

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