Shifting to Cloud in the UK Financial Sector

While the financial sector has been slower to adopt cloud than other industries, its quickly recognising the need to make a serious shift – and the UK market is no exception. As consumer demand for things like mobile banking and investing, and online platforms continues to explode, digital transformation strategies have become top priority. And with competition burgeoning, and the increasing need to deliver solutions and meet new consumer demands faster, UK financial services firms have begun looking to the cloud to execute them.

According to a recent report by Cloud Industry Forum (CIF), UK cloud (public and private) adoption rates are up to 88 percent. But with far greater regulatory demands and security challenges, the financial sector has been slower to take a cloud-first approach.

However, since the Financial Conduct Authority (FCA) published a cloud guidance report in 2015 stating they “see no fundamental reason why cloud services (including public cloud services) cannot be implemented,” UK firms have begun taking a more confident approach to cloud – including leveraging the advantages of the public cloud.

What public cloud can provide
With the ability to provision on-demand resources in minutes or hours, as opposed to weeks or months, public cloud providers like AWS and Azure enable businesses to reduce time to market by developing and delivering new products and services to customers faster. This has become particularly attractive to financial services firms, as demand for mobile services and more personalised customer experiences continues to grow, and new needs exceed what the data center can deliver.

On top of increased agility, the public cloud also provides businesses the ability to better meet customer demand and utilise resources through automated scaling and rightsizing of infrastructure. With financial services becoming increasingly web-based, and more being asked of big data and analytics solutions, companies must be able to scale IT resources quicker, and more efficiently.

For firms looking to avoid the large capital investment needed to refresh the data center, this means of procuring and provisioning resources rapidly as a service also provides reduced TCO. Through the pay-as-you-go pricing structure of the public cloud, there is no need for any upfront or hardware investment, allowing enterprises to reinvest capital in other critical areas like application development, innovation, and business initiatives.

But of course, there’s more to consider than just the key advantages of the public cloud and not all in the UK financial sector are quite ready to make the move.

Weighing the cloud options
Greater agility and scalability, and lower TCO may be game-changers for many businesses in the financial sector, but some still maintain reservations about the public cloud when it comes to things like security and compliance.

This is not due to a lack of capabilities – providers like AWS and Azure have robust solutions for every aspect of data security and regulation. If anything, with the proper skills and operational expertise, security and compliance can be improved in the public cloud by writing policies and controls into infrastructure as code and automating configurations, enforcing them more consistently and mitigating human error.

Rather, a lack of public cloud knowledge and inability to effectively carry out migrations serve the greatest inhibitors. According to the CIF survey, for UK businesses migrating applications to the cloud, “On average it took 15 months to migrate applications to the cloud, with 90% experiencing difficulties when migrating to a cloud solution.” The top reasons given for these migration difficulties were “complexity of migration” (43%) and “lack of internal skills/knowledge” (32%).

Put simply, without a skilled internal team or the help of a managed service partner, migrations are often difficult for businesses to execute alone. Then there’s the challenge of realising the true benefits of the public cloud through smart and effective cloud ops and workload management.

Private cloud tends to be a more favorable option to some financial sector firms for these reasons – existing data center infrastructure and firewalls remain largely the same, and physical network, storage and server hardware are still managed by the client in a single-tenant environment; it’s a far more familiar model, and migration doesn’t require nearly as much new expertise as the public cloud.

While “familiar” does not necessarily mean “better,” it is true not every application or workload is a suitable candidate for the public cloud, such as legacy systems running on highly unique hardware platforms or certain applications with complex, business-specific requirements.

Which workloads go where?
With so many cloud solutions available, and an even greater number of applications and workloads to evaluate, determining first steps can be a paralysing task for UK financial sector IT decision-makers. Add to that the highest number of regulations and security threats in any private sector industry, and you’re left with a debilitatingly difficult set of choices.