The Unyielding Mainframe: Understanding Its Role In A Cloud-Driven Future | NTT DATA

Wed, 10 April 2024

The Unyielding Mainframe: Understanding Its Role In A Cloud-Driven Future

NTT DATA’s Global Research Reveals Generative AI Could be the Catalyst for Change

The banking sector is being boldly redefined by the dual forces of Artificial Intelligence and cloud computing. As we discussed in our last blog in this series focused on our global research "The Digital Horizon: Banking’s Shift from Mainframe to AI-Driven Cloud Infrastructure," these technologies have ascended to the top of the boardroom agenda. 

As industry leaders navigate a digital-first economy, they face the complex challenge of fostering a culture that not only embraces innovation but is agile enough to meet the rapidly changing demands of consumers and clients.

The Innovation Imperative

Banking's modernization and transformation initiatives has become strategic imperative. The resilience and security of mainframe systems have long been the industry's backbone. Migration has been complex and there are barriers. Yet the demand for agility and innovation is steering banks towards cloud and AI solutions. These technologies are rapidly transitioning from optional to essential, reshaping the status quo and the competitive landscape.

 NTT DATA’s research identified four specific groups of challenges when it comes to transitioning from mainframe to the cloud.

  1. Security & Compliance Concerns: The banking world, known for its emphasis on security and stringent regulatory standards, continues to express reservations about cloud technologies. Though cloud solutions have advanced significantly, the shadows of data integrity and regulatory compliance issues linger. In a sector where safeguarding customer data and facilitating vast monetary transactions are daily operations, such concerns are magnified.

  2. Technical Barriers: Migrating from tried-and-tested mainframes to unfamiliar cloud territories is not just about adopting a new technology. The sector faces a real challenge in finding expertise, particularly when it comes to cloud security.

  3. Recreating Functions & Services: Translating functionalities from mainframes to the cloud is a nuanced task. Each service or function on the mainframe has its intricacies, and ensuring they work seamlessly on the cloud requires both time and specialized skills.

  4. Transitioning with Precision: Migration is more than just a move; it's a transformation. Ensuring that this shift happens without downtimes, loss of data, or glitches necessitates a well-thought-out strategy
 
Cloud Computing: The Innovation Enabler

Technology’s role, once seen as a cost centre, is being redefined. The cloud has emerged as a cornerstone and enabler of innovation, offering benefits far beyond traditional IT’s remit. Improved security protocols, operational efficiency, enhanced customer experiences, and collaborative data management are just the beginning. As 88% of banking professionals agree, the cloud is the key to unlocking personalized customer services and ensuring swift operational responses.

The Cloud and Generative AI: A powerful duo of change

Generative AI has become an executive priority, demonstrating the potential to redefine banking models and make change that lasts forever. It’s a once in a lifetime technology that will reframe how banks operate. From revolutionizing customer service, to enhance efficiency, and sharpening strategic decision-making. Change is the status quo and there’s optimism among banking leaders, with a majority viewing Generative AI as a critical enabler of modernization through cloud migration and an accelerator of digital transformation.

The Strategic Balancing Act

Banks walk a tightrope. They must retain the robustness of mainframe systems while also transitioning to the innovative potential of cloud and AI. It's a shift that requires a strategic and well-managed approach, ensuring that the security and functionality that mainframes have long provided are not lost in the transition.

This shift is transformation that touches every facet of the banking institution, demanding a change in culture, processes, and skills. Banks are at a critical juncture, where they must navigate their modernization with precision and foresight. It's essential that this journey reinforces the bedrock principles of banking—security, dependability, and the trust of customers. Trust is hard won and easily lost. 

However, by leaning into AI and cloud technologies, banks have the opportunity to not only safeguard but also strengthen these core values. 

Facing the Strategy Gap

Despite widespread recognition of these technologies' importance, a significant 80% of organizations admit to lacking a clear strategy for AI implementation. This gap presents an urgent call to action for decision-makers to devise robust strategies that can harness the transformative power of AI and cloud technologies.

Conclusion

"Banking in the Cloud: Navigating the Digital Transformation” is a must-read for banking decision makers, wherever you are on the journey. You’ll learn how your peers are addressing this vast challenge and opportunity. As 91% of decision-makers rally behind AI and cloud initiatives, the path forward is clear. Modernization, transformation and Innovation with AI and Cloud will boldly redefine banking’s future. 

While the mainframe and its associated applications are expected to remain relevant in the foreseeable future, it is undeniable that the advent of Generation AI will have a profound impact on the delivery of technology services. This will enable the deployment of viable methods to modernize existing technology landscapes, facilitating the transformation and evolution towards more modular, cloud- based components throughout the software value chain, from requirement management to coding, testing, deployment, and even operations.

Enrique Ávila IT Transformation Director at Banco Sabadell

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