Financial services are embracing multi-cloud

hybrid-cloud

Multi-clouds — environments made up of multiple public and private clouds typically used for different purposes — may well be the cloud of choice for banks. That’s according to an independent report by 451 Research, ‘Multi-Cloud Fundamental to Financial Services Transformation.’ I’m not here to argue.

This report, which was sponsored by Canonical — the cloud and container software business and parent company to Ubuntu Linux — revealed that financial services businesses such as banks and insurance companies aren’t sticking with the past. Instead, they’re cautiously adopting and integrating multiple cloud platforms.

To be exact, 60 percent of EMEA and North American financial services businesses expect to move to multiple clouds within the next two years. On these Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) clouds, they’re building their own artificial intelligence (AI) and machine learning (36 percent); running containers (29 percent); and employing blockchain (24 percent).

Why are they moving to multi-clouds? There are several reasons.

First, 62 percent of financial  IT managers believe a multi-cloud will enable them to improve application performance and availability demands. Specifically, they’ll be doing this with containers and Kubernetes. The reason is financial services run workloads that require isolation from one another when they contain sensitive customer data or intellectual property. Facing stiff privacy regulations, such as the EU’s General Data Protection Regulation (GDPR) and the forthcoming California Consumer Privacy Act (CCPA), almost half of financial companies expect multi-cloud to help satisfy the requirements of these laws.

Secondly, 41 percent expect the multi-cloud model will help them reduce the overall cost of cloud deployments by helping with datacenter consolidation and more effective use of resources.

Financial services firms have already been moving slightly faster to the cloud than other businesses. Fifty-one percent have already adopted IaaS, 49 percent on-premises private cloud and 39 percent PaaS. 

But only 18 percent of financial services firms said they are broadly implementing IaaS for production applications today. That lag is because they’re still wary of public clouds and also have container and cloud security worries.

This is further complicated by their need to comply not only with GDPR and CCPA, but with Payment Card Industry (PCI); the Statement on Standards for Attestation Engagements (SSAE) 18 auditing standard; and Sarbanes-Oxley (SOX) regulations. Solving these cloud compliance issues requires specialized infrastructure configurations and IT skill sets that not everyone has. It’s hard enough to find people who can deploy clouds with Kubernetes. Finding people who can navigate the financial sector’s legal requirements and the cloud is like searching for hen’s teeth.

To meet these problems, Liam Eagle, 451 Research’s Research Manager for Cloud, Hosting and Managed Services said, “The next few years will bring critical changes, including a major shift toward execution on cloud platforms. Executing on transformation in the finance sector means tackling challenges such as regulatory compliance and information security. We expect hybrid IT strategies and partner-led managed services to be key elements in overcoming those obstacles.”

Will they be successful? They must. They have no choice. These companies know their future lies in the cloud and they’ll be working as hard as they can with partners to make it happen.

If I were planning my career today, I’d be taking banking classes as well as courses in containers and the cloud. The cloud is no longer being used for one-size fits all answers. It’s being deployed for vertical businesses as well.

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