Why Banking Industry Cloud Strategies Lag Behind

On one hand, IT decision makers in the baking industry can be applauded for being cautious when making the decision to migrate sensitive financial information to the cloud. On the other, customers are demanding more apps, access and visibility, all of which can be improved with a flexible cloud model. Going into 2019, retail banks are going to have some serious decisions to make. According to a recent Accenture Research report, bank leaders understand the need to migrate to the cloud. Yet nearly half admit to not having a clear strategy. Let’s figure out why.

At first glance, the Accenture survey paints a gloomy picture. Leaders see the cloud as both a way to drive growth and to stay nimble as it relates to the digital disruption of the banking industry. Yet cloud migration road maps are not as far along as other businesses outside of the financial industry. Two major issues are cited by those surveyed are preventing a true cloud strategy road map. The first is that nearly 70% of banks surveyed still rely on key legacy systems that they claim are either difficult or impossible to migrate to the cloud. In many cases, there are no comprehensive plans detailed on how the migration to the cloud should be executed.

However, if you’ve been watching the development of the cloud computing industry over the last decade, this problem is no different from other industry verticals faced with similar legacy system migration challenges. With the right migration strategy in place – and with the right set of cloud tools – it’s safe to say that legacy platforms are not a terribly steep barrier to entry these days.

The second issue raised by nearly 90% of banking executives that responded to the survey deals with a perceived skills gap in the area of cloud management. Yet again, for businesses that have already successfully migrated to the cloud, this also was a concern. While any change to infrastructure architecture indeed does create a potential for a skills gaps in terms of ongoing management and support, this is true when adopting any new technology architecture. Thus, change must be embraced as part of the banking business culture.

What I’m getting at is that the banking industry's issues with migrating to the cloud are really nothing new. The real reason why banks lag other business verticals has more to do with external regulations, as opposed to internal feet dragging. For years, government regulations of most nations prevented banks from using public clouds for many of their services due to data security concerns. Now that most of those security issues have been addressed by cloud service providers (CSPs), cloud adoption rates are naturally 5-to-10 years behind.

That said, I agree with the Accenture Research conclusion that banks must work to accelerate their cloud strategies. Business digitization is proving to be an increasing factor for banking customers. The faster a retail bank can begin offering new and useful services to their customers, the more likely they are to secure existing customer and appeal to new. I’ve also argued for years now that cloud computing is at the forefront of data security. Thus, banks simply need to move past their irrational migration fears as they solidify their road map toward an inedible move to the cloud.