Banking and financial services (BFS) is leading the way in cloud adoption across industries. Cloud strategy is now one of the top three topics for banking CIOs as their institutions continue their digital transformation processes, modernising legacy infrastructure and developing new products, services and revenue streams.
As an active player in banking technology services, NTT DATA recognises the challenges and opportunities presented by the emergence of paradigm-shifting technologies such as cloud services and strives to understand and participate on the leading edge.
In this spirit, senior members of NTT DATA's BFS teams, with representation from product development, technical consulting and marketing and sales, engaged with Everest Group in a two-part workshop exploring themes and priorities driving the ongoing migration to cloud-based services in the global corporate banking marketplace.
Efficiency and cost both play fundamental roles in banks' choice to migrate towards the cloud. Indeed, cost and time savings are often seen as the main drivers behind cloud adoption, but it is important to note that they are not the only factors pushing banks towards the cloud. Innovation and time-to-market are equally as important as saving cost and time, and are additionally beneficial in crafting a better customer experience.
This is a significant feat. As challenger banks begin launching digital-native services, customers of established regional and global banks are expecting a more refined user experience similar to the tailored, customer-centric engagement model emerging in banking. The move to cloud-based services is intended to harness the power of shared data to drive better decisions and efficiencies and create new and more effectively timed /targeted interactions.
But how can banks and their technology partners navigate such a complex and always-evolving landscape without losing focus on the critical, underlying driver of all this change – the customer? And how can they navigate other associated risks?
Enter: 'Systems of Growth'
One concept stood out of the many insights and provocations explored in our BFS Cloud Strategy workshop: 'Systems of Growth'.
Simply put, 'systems of growth'in the cloud migration/adoption context refers to a multi-dimensional approach to delivering an end-customer experience that feels tailored, frictionless, and just-in-time.
In practice, it's about the delivery of seamless end-to-end customer experiences through the coordination of multiple resources. The core banking system, the IP stack, and data processing engines capture, consolidate and organise 'trigger points' or 'events' from the range of channel partners and other data feeds.
A bank with an effective system for capturing and organising information from multiple data streams across its ecosystem will find more frequent opportunities to engage end customers effectively and profitably.
Thus, the 'Systems of Growth' concept in this context refers to the use of the cloud as a highly configurable, central platform for the collection, organisation and processing of multiple, diverse data streams and generating a better, more cost-effective experience for both the bank and its customers.
Let's look at a few example elements of the Systems of Growth approach to cloud solutions and their benefits to the BFS customer:
- Cloud for Efficiency: Cloud-based services and solutions reduce labour, technology, real estate, energy and other costs for the institution, offering well-managed institution savings, risk mitigation and agility that can be passed on to the customer and the shareholder alike.
- Cloud for Growth:Institutions should prioritise and take the opportunity to differentiate themselves, from the likes of secure connectivity with the financial ecosystem to launching new products and services at a rapid rate.
- Cloud for IP Monetisation: Migration of services to the cloud enables demand-generation teams to assemble, analyse and utilise large quantities of data from multiple sources, identifying opportunities that were previously 'invisible' and constructing well-timed, appropriate offers to their end customers.
- Cloud-Native:Institutions looking at building effective, future-proof next-generation services and, if possible, platforms may choose to start from scratch instead of trying to 'transform' a legacy system or approach. If starting from scratch is not an option, re-architecting current systems is another good way to future-proof your services.
In practice, then, the Systems of Growth strategy as employed by an established global or regional bank would approach cloud migration/deployment in segments such as those mentioned here and would most likely involve multiple technology partners, as we discuss below in relation to one of the primary constraints to cloud migration: The talent shortage.
The Human Talent Gap: Constraining Growth in Cloud Services
For all the opportunities that cloud-based services offer, a challenge facing every industry considering cloud migration or development of cloud-native services is a shortage of qualified human talent to develop, deploy and manage services in ever-increasing demand.
Many global banks seeking an early-mover advantage in establishing cloud-based services have found the talent gap to be one of the most significant obstacles to overcome. We also see leading technology vendors and players in the chain struggling to address this.
However, mitigation of the talent gap is a complex challenge extending far beyond any single industry and into the realm of education and macro-economic policy. So, what can an individual financial institution do now and in its near-to-mid-term planning to work around this?
At NTT DATA, part of the solution is a long-term commitment to invest in the present and future generations of employees – particularly the engineers that design, build and maintain the platforms through which cloud-based banking services are delivered:
- Training and recruitment programmesfor coders, systems engineers and others joining the workforce as they finish formal education and provide a stepping stone into a dynamic and critical new segment of the economy
- Centres of excellencebring new and current members of this next-generation workforce together, ensuring current and future BFS customers capture the benefits of NTT DATA's cloud-enabled services and capabilities.
It is worth noting that the Human Talent Gap is additionally addressed through the use of NTT DATA's assets and partnership ecosystem, not just with hyperscalers, but effectively expanding to sectorial partners and owned assets and accelerators too.
In wrapping up our cloud strategy workshop, the fundamental takeaway is that a multi-cloud strategy is undoubtedly one of the most effective and judicious approaches for banks and other financial institutions to consider as it builds and executes their digital transformation strategy. One of multi-cloud's greatest strengths is that it is adaptable; allowing institutions to choose specific solutions that will work best for them. In a similar vein, institutions do not need to rely on a single supplier to provide solutions to a variable number of areas. For example, the Google Cloud platform can be used for Data & Analytics, while AWS can be used for managing workloads and MS Azure for the Workplace.
Ultimately, different cloud providers will show greater strength in differing areas: an institution should make the most of using a variety of suppliers to reap the best benefits across the board. By utilising multiple technology partners, the talent challenge and other risks are distributed across a broader network, meaning the institution is not over-dependent on any single supplier – including hyperscalers – and the bank can provide a more truly comprehensive package of cloud services, while the bank's end customers enjoy the benefits of a tailored customer experience.