Other parts of this series:
- Cloud is more than a technology paradigm—it’s a business asset
- How can cloud help European financial institutions face competitive challenges?
- Overcoming the perceived barriers to cloud in financial services
- The five elements of cloud-based transformation
- There is more than one path to cloud
- Adopting a cloud-based approach to digital transformation
European financial services institutions can realize tremendous benefits by adopting a cloud-based approach to their digital transformation. But there are essential factors to consider.
Thus far in this series, I have reviewed the current state of cloud adoption among financial institutions in Europe and discussed some of the challenges these firms are facing. I have also outlined some of the perceived barriers that continue to hold banking and financial services back from taking full advantage of all the benefits cloud can offer them.
So, how should finance firms in Europe approach their cloud-based digital transformation?
In this post, I will explore the key elements that senior management and the board need to clearly understand to make their cloud-based approach to digital transformation a success.
Make an aggressive move to the cloud
As we have discovered in this series, the benefits banking and financial services firms in Europe can realize by adopting a cloud-based approach to digital transformation are tremendous. But in addition to the perceived risk and security concerns outlined in post 3, other issues are holding these firms back, including the following:
- Many firms have made significant investments in their legacy systems, some of which have yet to be fully amortized; as a result, these firms may worry that migrating to the cloud could increase costs at a time of intense pressure to reduce costs instead.
- Some firms may worry that key applications are not “cloud ready” and may require significant modernization before they can be migrated to the cloud.
- Some firms adopt a wait-and-see attitude, watching how competitors handle cloud challenges before committing to major change.
Instead of letting such issues deter you, we recommend a different approach.
Cloud capabilities have evolved so rapidly that cloud can support any strategic direction, whether through a hybrid approach or via the public cloud.
Culture, talent and beyond
To make cloud-based digital transformation a success, senior management and the board need a clear understanding of the following key elements:
- Cloud should provide the basis for an environment that encourages innovation and excellence.
- Senior management should provide strong, visible executive sponsorship, with clear messages that comprehensive changes are underway.
Roadmap and migration planning
- Before the transformation process even begins, the firm should develop a roadmap and migration plan that establishes priorities and the steps needed to accomplish them in sequence.
- The cloud architecture should incorporate:
- Backup and redundancy features while addressing security and performance concerns.
- Toolsets and processes to manage the cloud once implemented, and to make sure that anticipated business benefits are realized.
- A holistic cloud implementation should result in a centralized, fact-based delivery program that incorporates DevOps and automation.
- Through a robust, tightly controlled approach to governance, firms can conduct business as usual activities in parallel with cloud migration initiatives.
- A key milestone might include the elimination of data centers.
- While cloud-based financial services firms can access a variety of solutions using Software as a Service (SaaS) models, they will develop their own software for core functions in most cases.
- This means not only attracting and retaining new types of talent, but giving development teams what they need to innovate and deliver.
- The challenge of finding scarce talent in a tight market should not be underestimated.
- Financial services firms moving to the cloud should build strong relationships with key suppliers.
- It may be possible to reduce the number of overall relationships, but competition should be encouraged, and contracts and incentives should be carefully thought through.
In my next post, I will show you some of the options you have for creating your own path to the cloud.
To learn more, read the full Moving to the Cloud—A Cloud-based Strategy for Banking Firms in Europe report.