In the past decade, nearly every industry in our expanding economy has adopted cloud infrastructure in some form, whether through a public, private or hybrid cloud. While cloud adoption in recent years has been vast, some industries have naturally been more hesitant to transfer their traditional IT infrastructure and on-premise platforms to a cloud environment. The most notable of these has been the financial sector.
Cloud vs. on-premise
Cloud infrastructure is widely accepted as the future for businesses’ IT infrastructure and operating systems, as they increasingly look for more flexible and scalable operating systems.
Essentially, the fundamental difference between cloud and on-premise infrastructure is where it resides. On-premise infrastructure is installed locally (on-site), whereas cloud infrastructure is hosted externally within a secure data centre and managed by a third-party cloud provider.
The barriers to cloud adoption within the financial sector
Today we are seeing a rapid shift of businesses adopting the cloud as the needs of the consumer and the day-to-day needs of businesses change. However, some are faster than others.
When it comes to transitioning to the cloud, one of the biggest challenges for the financial sector is the significant amount of IT investment that is tied up in traditional, on-premise infrastructure.. This substantial investment, as well as underlying security concerns of hosting business-critical data in the cloud, are the core reasons for the slow implementation of cloud technologies for many in the financial sector. This slow adoption of cloud technologies has created the feeling by business leaders that the financial sector is being ‘left behind’.
This feeling of being left behind has somewhat been exacerbated with the recent and rapid expansion of the FinTech industry, as well as the growing competition from the developing technology-based faction of the financial sector.
In reaction to the wide adoption of cloud-based infrastructure from other industries and SMEs within the financial sector, more established financial institutions are becoming increasingly aware and accepting of the idea of moving towards specialised cloud-based systems for day-to-day operations, with the aim of improving the customer experience.
Arguably the most important development in recent years is the shift in opinion around the security of the cloud. Due to the nature of the industry, businesses have been naturally hesitant to store sensitive financial information, large amounts of personal data and vital trading platforms away from on-premise infrastructure. However, with developments in technology and practices, there has been an innate increase in the sense of confidence towards the secure nature of the cloud within the financial sector – especially when a system is looked after by an accredited managed hosting provider.
What are the benefits of the cloud over on-premise?
As cloud-based technologies become increasingly popular, it is important that we explore the benefits over traditional on-premise infrastructure.
- Access from anywhere: You can have remote access to your business applications from anywhere, at any time, via a specific portal, from any secure device.
- Scalability: Cloud-based technologies provide greater flexibility than traditional on-premise infrastructure as you pay for what you use and can easily scale to meet the ever-changing demands of your customer base, as well as the ability to meet the needs of a developing business environment.
- Security: Cloud-based operating systems, located in external data centres are often far more secure than storing and maintaining your infrastructure on-premise. Data centres and cloud hosting providers have to regularly meet high-level security accreditations in order to operate, which provides you with the confidence that your hardware, data and systems are fully secure.
- Cost-effective: Cloud-based solutions are often far more cost-effective as when you work with a third-party provider, you don’t have to worry about general maintenance costs, upgrades or paying extra for support. When you move to the cloud, you no longer have to pay for the power, cooling or security of the on-premise infrastructure.
Is cloud the future for financial services?
While there is no definitive answer to this question, a significant argument can be made in its favour. It is clear that banks and financial institutions are beginning to ramp up their adoption of the cloud as part of their IT strategy. As traditional investments in on-premise infrastructure continue to slowly wind down, it is expected that the financial sector will further increase the presence of cloud services in its day-to-day operations. This is expected to be fuelled further by the exponential rise of the FinTech industry and other technology-based financial services. In the age of digital transformation, it is clear that cloud innovation is fast becoming a necessity to stay competitive.
Is it time for your financial services business to move to the cloud? If you would like to discuss the best cloud-based solution for your business, give our sales team a call on 0800 612 2524 or email email@example.com
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