Investing in the future of enterprise technology is expensive and time-consuming, our industry research offers some invaluable peer insights to their planning and executing strategies in the public cloud.
Cornerstone Advisors conducted in-depth interviews with CIOs and other tech leaders at banks to learn more about how banks are—and aren’t—getting to the cloud successfully. Banks of every size see the promise of the cloud, and legacy core banking systems make the journey difficult. That’s not surprising. The report drove home a key point that may surprise you: Transformation is as much about culture as it is about technology.
The research shows that banks are embracing the cloud at a faster pace than ever before. Why? Banks see that the current approach of a slick customer-facing digital experience masking outdated legacy systems won’t work. Many digital experiences (even very well-designed ones) are a façade. It’s like putting a flip phone inside a smartphone. Technical limitations make it hard to meet customer expectations.
Banking leaders know they face a pressing competitive challenge, one that calls for more transformation speed. As one regional bank CIO told Cornerstone: “It’s very hard to think about matching the customer experience of an innovative fintech with our current technology stack. We need an infrastructure for the future than connects to new platforms and capabilities faster.”
Why move to the cloud?
Shifting to the cloud at scale became a must-do for banks. It’s essential for digital transformation. Moving to the cloud makes it easier to participate in technology trends that are reshaping (and have reshaped) virtually all industries. Financial service providers are late-comers to the party. But the pandemic made it clear that banks needed to tap into the many benefits of the cloud.
Cornerstone noted several benefits that CIOs are especially eager to access. Two that stood out were greater enterprise agility and reduced risk. Cloud technology removes compute capacity constraints, opening the door to the unlimited use of real-time data for everything from product innovation to threat detection. The result is greater agility and intelligence across the enterprise. And thanks to resiliency and redundancy, the cloud reduces risks, such as technical failure and data loss. Crucially, the use of the cloud also makes it easier to deploy and maintain leading security applications.
Culture and technology obstacles to cloud adoption
Cornerstone explores the many challenges that banks face in adopting cloud technology—and the reasons that so many have taken a go-slow approach. It became clear during the pandemic that continuing to rely so much on legacy core banking systems had to end. Banks saw that they were nearing the “expiration date” of systems that had long been getting stale.
Bank leaders see their fragmented and complex IT environment as the root cause of siloed data and slow processes. Yet, moving away from those legacy systems requires significant legacy integration effort. Many banks lack the specialized expertise to advance integration quickly. Regional banks face an especially pressing challenge in this regard. That’s because there’s a severe shortage of people with the needed skill sets in their regions. Partners can (and do) help, but banks struggle to manage the multiple partners required.
How banks are gaining speed
The banking leaders are optimistic about the road ahead, despite the challenges they face in adopting cloud at scale. Here’s a key takeaway from the report: Banks of every size must embrace a cloud-based future. They must and so they are. The bank executives cited several ways they plan to navigate a successful transformation:
- Embrace multi-cloud and hybrid-cloud strategies: Banks have the option of public, private, and combined approaches. And they are exploring all options, choosing the approach that makes the most sense for each use case.
- Build and cultivate talent for a hybrid environment: Leaders assume that multi-cloud and hybrid-cloud approaches have staying power. They’re creating IT environments and upskilling people to succeed in that environment.
- Sharpen the focus on governance, risk, and compliance (GRC): In the past, GRC concerns led to cloud avoidance. Now, banking leaders see that the cloud—with the right controls—can improve GRC management.
- Gain speed with a partner: The go-slow approach of the last decade has given way to a search for speed. Banks expect organizations with cloud and financial services expertise to provide the expertise needed to move faster. A banking CIO said: “I am looking for partners with the practical knowledge of maintaining complex cloud environments and integrating them with the private cloud and on-premise world.”
Get the full report
Read Cornerstone’s complete findings for a detailed look at how banking leaders are accelerating digital transformation. This summary can’t do justice to Cornerstone’s insightful and clear examination. It’s clear that banking leaders see their organizations needing both a digital transformation and a cultural one, with upskilling necessary to advance cloud strategies. Download the report to learn more about how Cornerstone sees this unfolding.
About Cornerstone Advisors
Cornerstone Advisors shows banks, credit unions, and fintechs how to reach the next level of performance through smarter technology decisions, reengineered critical processes, and meaningful business strategies. Leaders throughout the financial services industry look to Cornerstone for data-driven analyses, insights, and perspectives.