What FS companies are getting wrong with their cloud based solutions

 Nick Stemp photo
Nick Stemp
3min read

Everyone’s got a bike these days, right? How many bikes would you admit to owning? Is your ‘multi-bike’ strategy paying off? Now ask yourself the same questions about your use of cloud.

All financial services companies are on a journey to cloud. Their motivations are right and they know where they want to get to. Cloud can offer scale, power your transformation, and most importantly enable innovation. Then why do so many take so long to get to the finish line and never fully realise the benefits of their cloud investment?

One reason is that they don’t ride the bike well. They buy the latest model and use it like their old one. Instead of creating solutions with cloud managed services or serverless, FS companies build their own patterns using infrastructure rented from the cloud platform provider. It quickly becomes an extension of the data centre with the same rules and constraints.

The race is over before it even begins

Avoid the hills

Of course you can always build your own. Configure the parts exactly how you think you need them. Good engineers can build something fantastically fit for purpose. “We can automate it and manage it as code”, you’ll hear them say. But how long will it take to get there, and will the security and risk folk ever be happy? In bureaucratic organisations the road is long and hilly. They turn up late for the start, the paper-based design takes months, governance similar, and the engineers spend a few weeks rushing something through under immense pressure. The race is over before it even begins.

cloud platform providers benefit from being able to build and innovate their services for the masses

And enjoy the ride!

But there are other ways to build cloud based solutions. Each cloud provider and their partners has an established set of managed services and serverless capability. Think Google Kubernetes Engine (GKE), AWS Fargate, or Azure Functions as examples. They offer reduced operational overhead, auto scaling, security, integrated monitoring and automated day 2 operations. Think of the time, investment, effort and emotional energy it takes to create something similar in-house. They’re slick because cloud platform providers benefit from being able to build and innovate their services for the masses, not a single company.

nobody ever won the race building their bike wheel

Start fast to win the race

Let’s remember, nobody ever won the race building their bike wheel. So, given the clear benefits of cloud platform services, why are some FS companies taking their time to adopt them? Why do they spend six months building cloud based infrastructure instead of consuming cloud services and getting a viable/lovable product to their customers quickly? One of the main reasons is the decision making process.

Trying something different can be scary right? For all sorts of reasons when we’re presented with choices, it’s in our nature to pick the one we are familiar with. We may not even realise it. The route home from the shops, the brands we buy, the food we eat. It's the same with technology choices. In incumbent FS companies, making a progressive choice can quickly be undermined by:

  • Hierarchies of committees who each have a unique angle on the decision
  • The high penalty for getting it wrong, particularly when the organisation is slow moving
  • Asking the people who look after the current capability for their opinion
  • Misplaced opinions from those who have been burnt in the past and perhaps haven’t kept up with the pace of technology change
  • Risk and security functions that aren’t aligned to the mission
  • Fear of cloud provider tie-in and the regulator stance
  • Historic supplier agreements

Their decisions are shaped by their future and not the legacy of the past.

Neobanks and fintechs behave differently because they’re growing quickly and need to fight for market share. Their decisions are shaped by their future and not the legacy of the past. For many incumbent financial institutions maintaining the status quo has led to huge technical debt; old code, old versions, old tin. Don’t make the same mistake as you build your solutions on cloud.

Now is the time to be different and start leveraging the innovative services that each cloud platform provider has to offer. Spend as little time as possible thinking about the infrastructure layer, and start to use the cloud services which underpin many of the world's biggest brands. Within your organisation become a ‘rule breaker’ and challenge why things are done a certain way. Instead of taking months to make a decision … get on your bike and give it a ride!

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