Hybrid Data Cloud: the only option for the Financial Services Industry?

The use of data and analytics applications supports enterprises across all industries to improve management , resiliency, and flexibility across business strategies. In fact, according to Cloudera’s Enterprise Data Cloud Maturity Report, 96% of senior business decision-makers reported that embedding data strategies into their daily routine is fundamental to further understanding and developing their organisation’s performance.

In the financial services industry specifically, the uptake of data analytics applications has fuelled an overhaul in the way organisations store and manage their data, and how they do business. In fact, in the latter half of 2021, 40% of IT decision-makers admitted they were managing and storing their data in a hybrid environment, mostly on-premise, but this is set to change. Increasingly, companies globally are choosing to adopt the Hybrid Data Cloud, as it offers improved agility and flexibility, to allow banks to change strategy as required.

The question is, why The Hybrid Data Cloud? And what makes it so effective for financial services?

The Hybrid Data Cloud is a logical architecture and implementation that provides an intuitive and consistent experience for data developers and users. This approach facilitates data access, whilst also ensuring an enterprise’s data security, governance and customer privacy is protected. It is also able to provide open and extensible support for clouds, data types and data applications. This is being increasingly adopted by enterprises, especially those in the financial services sector, as it allows them to develop a more efficient data-driven culture throughout the business, tap into the best skills in effective teams and ultimately help grow the organisation.

The key to success with The Hybrid Data Cloud lies in how it is deployed. Working with numerous customers, I’ve seen that there’s a series of key considerations and issues that must be evaluated and prioritised when developing a business strategy for financial services.

1. Identifying your data’s purpose

Financial services organisations need to recognise the value of data and start thinking of data as a key differentiator and advantage to the business strategy. Crucially, this must be done before they begin assessing the data infrastructure. Once there has been this shift in perspective, business decision makers need to understand the purpose of the data they are analysing and how it aligns with their business goals. As soon as these fundamentals have been understood, businesses can move onto building an understanding of what they want to improve within the organisation:

· Is the customer journey personalised?

· Should the speed of regulatory reporting be improved?

· Have the foundational use-cases been operationalised?

· Can data warehouse costs be reduced?

· Can the mainframe be modernised?

Financial services enterprises must answer these important questions to help them understand which data the business should be focusing on, how to analyse the data and which use-cases to implement first to deliver the value needed.

Shifting towards a real-time data architecture will help businesses change how they operate, especially as customers and organisations become more connected. This shift will drive more timely data decisions and support the development of a data-driven culture. A product-focused approach to data management and curation will result in more informed decisions made in the operational aspects of data usage, related to who is the customer of the data, and the roadmap for continuous innovation in how the data is managed. It also brings into clear focus what levels of SLA are required for use.

2. The importance of taking a multi-cloud approach

The Hybrid Data Cloud is fast becoming the technology of choice for enterprises. Although the specific profile varies with each company, the demand and requirements remain the same. The chart included in our recent Enterprise Data Maturity Research Report, highlights this trend across businesses from a variety of industries. One of the most compelling statistics is that 36% of enterprises expect an increase in multi-cloud deployments over the next 18 months. This has been attributed to improved flexibility, cost management and regulatory oversight prevalent for financial services. In 2021 over 57% of Enterprises repatriated use-cases from hyperscale public cloud, back to on premise. Flexera Reports that 80% of organisations have a hybrid cloud strategy.

3. Reducing costs

Axis Bank and Kasikornbank are both great examples of how our customers have benefitted from the cloud’s flexibility. Both have massively reduced their costs by capitalising on the dynamically scalable environment of the cloud. They have been able to expand their processing power as needed meaning they only pay for what they use. An additional benefit to this is the ability to select the most cost-effective cloud service provider and transition workloads seamlessly between them. This approach is becoming increasingly important to enable workloads to be distributed based on competitive pricing models and a cost-effective management strategy to be implemented.

4. Considering the cloud concentration risk

Cloud concentration risk has become a high consideration for businesses across the industry, in order to protect them against financial instability. This has been thrust further into the spotlight recently with the UK’s Prudential Regulation Authority (PRA) highlighting concerns over the systemic risk of cloud service providers. It is here that a multi-cloud approach can help. A multi-cloud strategy can offer individual organisations greater flexibility for when legislation is implemented. For financial services, it can also provide improved collaboration across the whole ecosystem, including regulators, cloud service providers, and financial services entities, which has been outlined as a priority by the European Cloud User Coalition (ECUC) group.

5. Increasing the accessibility of the data

The need for access to a company’s data is spreading. Companies everywhere must now ensure that a wider breadth of positions within the business are able to access their company’s findings, rather than the select few they used to be reserved for. Previously, access to data insights were limited to a company’s data scientists or SQL experts. However, now business decision makers and other departments are also relying on access to their business’ data to formulate their strategies. The insights that company data can provide is growing, and as this increases, it is only natural that demand will follow suit, with more people requiring access to these data points in their day-to-day decision making. This is where adopting a hybrid cloud environment is crucial. It will allow businesses to develop a data strategy, which incorporates the ability to control data access while also implementing data governance and security. Due to its highly sensitive nature, the finance industry needs the best strategy in place in order to retain the core principles of the data, such as context, lineage and audit trails. Organisations such as the European Cloud User Coalition are providing an industry approach to the compliant and safe use of public cloud technology.

6. Enabling a Hybrid Future

Data technologies such as AI initiatives are constantly evolving and financial organisations are often having to adapt their digital transformation strategies to ensure their data insights are utilised efficiently. Hybrid Data Cloud options are able to evolve and respond proactively to technological and industry developments. This means companies are able to stay ahead of innovation and regulatory changes in order to maintain their success in the long term. For example, AI models can be built cost efficiently in the cloud, and deployed on-premise to secure and protect customers’ privacy, and these projects can be completed faster than on-premise resources can be provisioned. Fundamentally, by building in flexibility it enables your organisation to get to value faster and deliver innovative and differentiated services to your customers.