The need for Cloud migration assurance in the financial services industry

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When Cloud computing started making inroads into the industry around 2010, financial services firms were skeptical about moving their applications to the Cloud. The common reasons cited were regulatory restrictions, security concerns, and loss of control etc. However, in 2021, the Cloud has become an integral part of the digital strategy of all financial services organizations. One Forbes study states that about 83% of enterprise workloads are on the Cloud by 2020 and will reach 95% by 2022. Even regulators like the Financial Industry Regulatory Authority (FINRA) have moved 90% of their data to the Cloud to capture, analyze and store a daily influx of 75 billion records. There is no better endorsement of the Cloud than a regulator moving their data to the Cloud. We now have financial institutions born on the Cloud and remain fully digital in their operations. 

While the Cloud has become an integral part of the digital strategy of all financial institutions, many older institutions have legacy investments in applications that are hosted within their data centers. So, redoing their applications on the Cloud will be an expensive change and one that could be deemed unnecessary as well. Here is where migration of existing applications to the Cloud becomes an attractive proposition. Migration of applications to the Cloud provides an excellent middle road for institutions to become Cloud-enabled at lower transition costs. This method, often called the Hybrid cloud strategy, also helps them test the waters and adopt a progressive cloud movement plan rather than having a big bang approach. 

How does a hybrid cloud strategy benefit financial institutions? 

Financial institutions are moving to a hybrid cloud, enabling them to support a new generation of banking services without losing their “community” centered relationship-based model. The common drivers of benefits are 

  • The ability to plug into emerging financial services ecosystems, e.g. Trade finance platforms like Marcopolo and Voltran, have emerged as a fast-growing ecosystem that traditional banks need to plug into to participate in the future of business. 
  • Reduced time to market for rolling out new services or applications and mobile apps, e.g. Google Pay, has started to push smaller banks’ time deposits as a threat to large, established banks. Such moves need fast counters or, better yet, proactive measures from existing banks. 
  • Foster innovation using data and analytics 
    • Low-cost storage and computing enable institutions to analyze large volumes of data to generate business intelligence. 
  • Low-cost storage and computing enable institutions to analyze large volumes of data to generate business intelligence. 
  • Conversion of fixed-cost Capex into service-based Opex 
  • Enable on-demand services for end customers by exposing cloud-based APIs etc. 
    • These API based services help financial institutions quickly partner with last-mile Fintechs and Reg Techs to fight challenges from Big Tech companies foraying into financial services. 
  • Enterprise synchronization of the platform shared data among teams. This translates into better decision making and optimization of resources. 
  • Increased agility and scalability of the computing resources required for handling business changes 
    • Coinbase has deployed its bitcoin exchange on the Cloud to provide its bitcoin wallet and exchange services. 

What are the challenges faced by organizations migrating to the Cloud? 

While cloud enablement is a worthy goal, it can also be a laborious and risky process for many traditional financial institutions. The common challenges faced are: 

  • Decision on the right cloud provider 
  • Decision on what applications to be moved to the Cloud and what should be the priority of movements 
  • Maintain or better existing performance and reliability of the applications 
  • Many of the applications in the landscape could be third-party products which will need the product company to help the institution with the migration 
    • Cloud migration will involve co-ordination across multiple organizations 
    • Cost overruns due to these complexities 
  • Implementing suitable security and controls without compromising on any of these standards 
  • Ensuring zero disruption to existing process and release cycles 
  • Testing and ensuring all the applications are working as before 

As one can understand by now, cloud migration is not necessarily a customer-driven change. It is more of an internal organizational driven change. So, if the time and money spent on this change take away the focus of the leadership from the customer, the institution will have a considerable price to pay.  

How does a financial institution do the much-needed cloud migration yet not be distracted from its core business? 

 A valuable solution to the above is to engage IT service partners with fast and reliable cloud migration solutions. A comprehensive migration service will ensure the below outcomes: 

  • Optimization of costs based on rightsizing of computing resources and infrastructure 
  • Modernization of the infrastructure for greater security 
  • Ease of accessibility 
  • Leverage newer technologies to modernize the architecture of legal applications 
  • Faultless disaster recovery and business continuity 

A comprehensive cloud migration assurance strategy covering infrastructure, applications, and data is essential to ensure the outcomes listed above.  

What are the common attributes of a comprehensive Cloud migration assurance strategy? 

Infrastructure assurance 

  • Validating the integrations for the correct configuration settings 
    • A Forbes study says that 80% of cloud breaches are due to customer misconfiguration or mismanaged credentials 
  • Testing the integrated environment for checkpoints of desired scalability, resiliency, and responsiveness 
  • Configuration testing around servers, storage, and databases 
  • Testing validation for multi-tenant applications 

Application assurance 

  • Testing the functionalities along with the upgraded features  
  • Ensuring validation of the end-to-end business workflows  
  • Ensuring the integration of applications and business processes after the successful migration 
  • Validating the regulatory and compliance requirements 

Data Assurance 

  • Validating all database components 
  • Testing the data flow as per the requirements​ 
  • Testing of data security at rest, in use and during transit​ 
  • Enforcing checkpoints for the sensitivity of the data towards stakeholders through data privacy testing​ 
  • Assessing security vulnerabilities 

Conclusion 

Cigniti’s Cloud Migration Assurance Services comprises pre-migration advisory, Migration assurance and post-migration validation. We have the Cloud Assurance Platform (CLAP) built on top of our AI-enabled quality engineering platform, BlueSwan, which will provide comprehensive testing services across the migration lifecycle.  

The Cigniti BFSI Practice & Centre of Excellence comprises domain experts with experience across the various subdomains. Our BFSI Practice’s dedicated FinTech focused group concentrates on testing complex real-time applications. Our resources are experienced in Cloud migration, QA and testing services of various Banking, Insurance and Financial markets applications, including core banking systems, Life insurance, Annuities, Property & Casualty, Exchange trading applications, and risk management back-office systems, and various leading third-party vendor applications.  

Our Cloud assurance solution, Independent testing services, early warning signals, and deep BFSI domain knowledge in understanding business processes and requirements across the industry helps us create value-added solutions. Cigniti’s CLAP Platform, automated reusable test scripts, and automated test approach are our key technical differentiators. 

Cigniti’s Cloud Migration Assurance services can help you get the best out of your Cloud transition. Schedule a discussion with us to consult with our experienced team of cloud migration assurance experts. 

Author

  • Sathish has 20 years of experience in Consulting, fostering Innovation, managing Product Partnerships, Delivery Solutions and Program Management, focusing on the BFSI domain. Within Cigniti, Sathish is building a new age BFSI Practice & Centres of Excellence that focuses on building deep domain competence and developing solutions for the challenges faced by the industry.

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