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How Cloud is Positioned to Drive Transformation in Financial Services
What is the first word that comes to mind when somebody says “The Cloud?” Security was my first instinct. The question was posed to the entire gathering at the Cloud Financial Services Europe event in London last month as a way to get everyone thinking creatively about the Cloud. Technology may have been my second instinct but, when the crowd of attendees was polled, words like innovation, opportunity, agility, Fintech, and efficiency seemed to be more common.
As a professional who started my career in Financial Services IT before moving to the business side, I always thought that the Cloud was simply a clever tool that enabled quick and cheap access to virtualised infrastructure and platforms, and occasionally a great software solution available on a SaaS basis.
But, from a Financial Services perspective, security is the critical issue. The complexity of data residency and banking laws, the sensitivity of data protection, and the scrutiny from the Financial Services regulators mean that the adoption of the Cloud poses significant challenges.
And adoption is challenging, without a doubt. But what has surprised me is how quickly the Cloud is becoming a mainstream solution: In the last 12 months, regulators have regarded Cloud-based solutions much more positively than in the past, and we have seen government agencies, some of whom hold extremely sensitive data, using the Cloud. These actions are a huge statement of confidence from the public and government sectors.
"Meanwhile, some of the largest financial institutions have made adopting Cloud technologies a strategic priority. The reasons are clear. While security needs to be carefully considered and managed (e.g. by use of approaches such as a ‘hybrid Cloud’ to keep the most sensitive data on premises), the business imperatives of adopting Cloud technologies far outweigh the challenges."Jim Warburton
Senior Director, Global Head of Financial Services Business Consulting, EPAM
Take Wealth Management as an example. Customers now expect to access their portfolios through digital channels and also to receive automated advice. With the transfer of an estimated $30 trillion of wealth to the younger, more tech-savvy generation - it is clear that the traditional model of advisory wealth management cannot work in the long term.
The industry has responded by deploying smart Fintech-based solutions, combined with Cloud technologies, to provide their customers with what they want. Portfolios can be accessed securely via smartphones and the rise of “robo advisors” – the automated, algorithm based, online service that can give clients real-time data – are now responsible for providing portfolio management advice for an estimated $300 billion of wealth, which is forecast to increase to $2.2 trillion by 2020. None of this would have been possible without the deployment of Fintech and Cloud technologies within wealth management firms, and firms that do not adopt these technologies will not be able to compete.
So, when Financial Services professionals hear the word “Cloud,” perhaps the first word to come to mind should be “survival.”
For more on the Cloud, check out these EPAM interviews with FinTech Connect at Cloud Financial Services Europe:
Balazs Fejes, SVP Co-Head of Global Business & Head of Financial Services
Panos Archondakis, Senior Director of Wealth Management