CLOUD computing is moving to the forefront as a focus for the chief information officers, C-suite executives, and board members to help their banks prepare for the future, the consulting and professional services company Deloitte says.

Banking and capital markets leaders increasingly recognize that cloud is more than a technology; it is a destination for banks and other financial services firms to store data and applications and access advanced software applications via the internet.

The leading public cloud providers offer an array of innovative products-as-a-service that can be accessed on their platforms and help banks implement business and operating models to improve revenue generation, increase customer insights, contain costs, deliver market-relevant products quickly and efficiently, and help monetize enterprise data assets, Deloitte says.

The cloud also offers a huge opportunity to synchronize the enterprise; to break down operational and data silos across risk, finance, regulatory, customer support, and more. Once massive data sets are combined in one place, the organization can apply advanced analytics for integrated insights.

After years of focusing on the technology’s value as a cheaper, faster, and more flexible alternative to on-premise data storage, bank leaders are considering how they can leverage the cloud in three areas “above the line” to create new business frontiers and in three areas “below the line” to optimize the organization. Applying cloud technology in these six areas may help banks drive improved business performance and shareholder returns, the consulting company says.

Business unit and IT executives accustomed to an on-premise data center may find the prospect of upgrading or replacing legacy systems with an enterprise-level cloud solution to be quite daunting. Fortunately, banks can approach this transformation incrementally. They can mix and match hybrid and multi-cloud solutions based on their organizational needs, maturity, and readiness; most organizations choose a multi-cloud approach. Whatever the deployment model, data residing in the cloud can be as secure or more secure than it is with on-premise storage models.

Cloud deployment models
Companies can be all-in on cloud without being 100 percent cloud; they can mix and match based on needs. In each option, data can be as secure or even more secure than it is with on-premise options.

Business case development
Not only is the cloud helping to innovate IT strategy, it is also becoming an engine to quickly build new capabilities and services to address business imperatives, Deloitte says. Many transformative solutions (e.g., customer relationship management, finance, enterprise resource management) already are cloud-based—they are just not primarily communicated as such.

A cloud business case should emphasize how the bank can cost-effectively tap into cloud-delivered solutions to drive customer insights, experiences, and offers; grow revenue; lower costs; find and onboard better talent; and provide more consistent enterprise operating platforms. It also should include a baseline cloud value-assessment model to map the economics of changing market forces, pricing, and business assumptions and aid in scenario planning.

Finally, the business case should address change management issues: Cloud technology may dramatically alter certain employee roles; what steps may be needed to help adapt the organization’s culture and mindset?

Solution design and execution
The cost and effort to migrate workloads to the cloud may be a major concern for financial institutions contemplating executing cloud strategies. Cost and time to market are key factors when companies are seeking to leverage business-building technologies such as advanced data analytics and machine learning. External cloud providers offer these and other capabilities that can shorten development time versus building capabilities in-house.

Vendor management
The banking industry will be transitioning through both hybrid and multi-cloud environments for years to come. During this lengthy period, vendors likely will be offering new, cloud-based services and capabilities on a regular basis. Financial services organizations should avoid vendor lock-in so that they can adapt to marketplace changes without having to re-platform when moving from one vendor to another.

Also, as vendors mature, they may offer better pricing flexibility by leveraging different cloud platforms that enable an organization to move workloads from one cloud to another to meet business needs, and to apply best practices built on one cloud platform to departments using other cloud vendors. Adopting a multi-vendor/multi-cloud strategy can be complex and challenging; developing a common understanding of architectural components and governance strategy enables optimal use of multi-cloud environments.

Security
Data security concerns are top of mind for bank leaders. An important part of understanding the cloud is considering how an enterprise’s current infrastructure and capabilities may be limiting its ability to detect and address new risks and vulnerabilities—and how cloud technology can help.

Security is different in the cloud because of the tools that are native to each cloud provider’s environment and the fact that cloud providers typically take responsibility for the security of the lower-level infrastructure layers. The shared security responsibility between cloud providers and the clients they host changes how organizations should anticipate and prepare for security risks.

Regulatory compliance
Cloud computing can help banks and financial services firms meet ever-evolving regulatory reporting requirements in multiple operating jurisdictions—a critically important capability in an industry where cross-border transactions are the norm. Cloud solutions can also help banks conduct intraday liquidity and risk calculations, and mine trade surveillance data to detect anti-money laundering and other fraud issues.