Finance Monthly January 2020 Edition

THE MIGRATION FROM LEGACY IT SYSTEMS TO THE CLOUD Traditional companies are struggling to keep up Today’s digital landscape frequently imposes new demands on financial institutions, with innovative technologies and new regulations such as PSD2 disrupting established processes. As physical banks and cash machines continue to disappear from our high streets, there is a growing shift towards customers using their mobile phones to conduct their banking activity. In fact, over two-thirds of British adults now use online banking , putting great pressure on traditional banks that are burdened with legacy IT systems. As 46% of bankers perceive this infrastructure to be the biggest barrier to the growth of commercial banks , the need to update the network is more urgent than ever before. The challenger banks of today, born on the cloud, automatically inherit cost, performance, and efficiency benefits that traditional banks simply do not have. Without having to embrace the initial John Spencer, Chief Product Officer of Veridium www.veridiumid.com digital change, this new generation of mobile banks can be more nimble, hoisting technologies to personalise their services, and do so at a much lower cost. Legacy systems have proved reliable in the past, but in order to maintain momentum in the digital age, and compete with innovative businesses, financial institutions should push forward with rapid investment in cloud services. The need to migrate to the cloud Massive growth in data usage has made it increasingly difficult for organisations to store all their intelligence on in- house servers. Today’s financially- literate customers should not expect to have their personal information kept in physical computer systems. Instead, they expect instant access to their personal data anytime, anywhere, and in the most secure manner. While some financial institutions are exploring cloud-based solutions, many remain hesitant in undertaking a full- scale migration. With such a complex transformation to undertake and outdated architecture to contend with, companies are encountering certain obstacles. Time and cost pressures, in particular, are leading to some firms to ‘cut corners’when it comes to upgrading their infrastructure, causing severe disruption to customers. From October 2018 to October 2019, the UK’s Financial Conduct Authority (FCA) reported that major banks suffered 265 IT shutdowns, which prevented customers from making payments . The financial services sector has also been shaken by a new wave of regulations aiming to better protect both customers and businesses. Since the General Data Protection Regulation (GDPR) has come into force, European Union citizens have been granted more control over their personal data. This means that organisations collecting data are obliged to do so legally and to protect it from misuse. 38 www.finance-monthly.com FINANCIAL INNOVATION & FINTECH - CLOUD COMPUTING