Are you keeping up with leaders in cloud transformation?

Nick Weisfeld Director, PwC United Kingdom

The business case for cloud transformation is clear. Flexible, on demand and autoscaling infrastructures are far better at supporting the ever growing need for better and faster business insights. Traditional architectures, with huge fixed costs data centres, underutilised computing infrastructures and large operations functions are fast becoming unfit for purpose. Public cloud offers a real solution for the capital markets sector.

Our recent report with Association for Financial Markets in Europe (AFME) - Technology and Innovation in Europe’s Capital Markets shows that business leaders see cloud computing as a key priority. Interestingly, the report also highlights a divergence between those that are investing heavily in cloud adoption and those who are prioritising investment elsewhere.


CIOs & CTOs are leading the way

Amongst the leading cloud adopters there are notable similarities. Many have technology leaders who come from strong engineering backgrounds, often with experience across multiple industries. These leaders have been at the cutting edge of application development, and have often invented mission critical front office applications themselves. Because of this, they know only too well how much time and effort it can take to a) purchase hardware, b) install it into data centres, c) ensure the operating system is compliant and controlled, and d) deploy code. The time spent on these activities takes developers away from what they are on the ground to do – to write code that build the banking applications of the future. This, combined with the cost of running traditional on-premise data centres and the vast operations teams required to support them, is steering CIOs and CTOs to consider new approaches to delivering applications and infrastructure.


Adoption of public cloud

Financial services innovation teams have been experimenting with public cloud for some time. Even so, the widespread adoption of public cloud in large financial services firms has been slow. As described in our research, those banks that are investing in public cloud are doing so by exploring how to integrate hybrid cloud through Infrastructure as a service (IaaS) and platform as a service (PaaS) solutions. Whilst others are considering wholesale migration of their application estates to public cloud.

Simultaneously, the adoption of “North Star” cloud proprietary services (such as Salesforce, Workday etc) are bringing further considerations for financial services firms. These cloud based services are increasingly delivered through software as a service (SaaS) models, meaning that in addition to abstracting the hardware and operating system and buying them as an on demand service, firms can also abstract the software and data aspects and buy these as a service. This offers another migration path to public cloud for applications and will drive additional cost and agility benefits of cloud adoption for organisations that are able to deliver compliant solutions.


Tackling inefficiencies is an industry game changer

Done successfully, integrating public cloud infrastructure, can take away the pain of provisioning hardware and operating systems, reduce the time between request and receipt of hardware with a fully compliant operating system that is ready to deploy code onto, from many months to minutes. Not only does it mean that developers can focus on what they are good at and productivity levels go up, it also fundamentally changes the way you design and build applications. No longer do you design applications that sit on infrastructure that is always on and burning money; you design applications that use virtualised hardware only when it is needed.  

Rather than rejecting public cloud outright as ‘not the right solution for complex banks with large legacy infrastructures’, the leading adopters are starting to see this as a real opportunity to differentiate. Firms that do get approval to integrate public cloud in a compliant way and do re-architect their applications to make best use of public cloud, will be able to quickly move away from the pack with agile, efficient and scalable technology infrastructures, and a set of productive developers who can focus on inventing the applications of the future.


Challenges to cloud adoption

In addition to the challenges of internal risk and compliance, another key obstacle to realising the benefits of cloud is legal and regulatory concerns. A further trend seen in the leading pack of banks that are driving the adoption of cloud is that they have partnered with their internal and external stakeholder to work this through. Often this leads to them extending existing operation resilience frameworks and adapting them for cloud as well as consideration of abstraction strategies that support multi-cloud deployments and data migration. This requires risk and compliance to skill up in new technologies and ways of working to ensure that additional risks are understood and that the appropriate controls are in place.

Another concern is getting the right business case and migration strategy in place to deliver  financial benefits as early as possible therefore freeing up additional budget for further more complex migrations. Here there is evidence of novel approaches being adopted to offer cost effective solutions to legacy infrastructure and allowing large fixed costs to be saved early.

Probably the greatest challenge is the skills shortage. As more and more financial services firms realise the cloud transformation is a foundational component of a future-proofed digital strategy and therefore a business imperative, finding solutions to the already stretched cloud specialist market is key to realising the benefit. Here there is evidence that immediate demand is being met by service integrators retraining their workforces in cloud technologies. Financial services firms will need to do the same and should not limited their activities to the CIO and CTO functions. Risk, compliance and other three lines of defence functions will also need to learn these new skills.

Only by having the right people will firms be able to convey to their regulators, shareholders and customers how cloud technologies can be introduced without exposing the bank to additional risk.


Delivering greater benefits

Whilst technology leaders are therefore looking to emerging technologies such as AI and Machine Learning to first and foremost reduce cost and improve inefficiencies, the potential benefits can only be realised by underpinning these technologies with an enabling infrastructure strategy. Being able to process huge quantities of data to deliver faster and better insights is partly a data engineering problem that public cloud adoption is helping solve. Every firm should, as a minimum, be assessing the impact of emerging technologies on their competitive landscape and ensuring that they have their eyes wide open when making technology infrastructure strategy decisions. Bringing together true business understanding, technology innovation and the right human experience and skills has the potential to drive real change across the industry.



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Nick Weisfeld

Director, PwC United Kingdom

Tel: +44 (0)7702 441231

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