Cloud Computing in Financial Services
The financial services industry (FSI) is highly competitive and subject to stringent industry regulations. This has created an opportunity for cloud computing, which empowers IT organizations to scale their workload capacity and access new services based on their business needs. By augmenting their on-premises data center with public cloud services, financial institutions can increase capacity to meet customer demands, improve business resiliency, and deploy new technology capabilities.
By 2024, 63 percent of enterprise infrastructure hardware spending will be dedicated to cloud technologies.1
While the public cloud unlocks new services for financial institutions, there are also benefits to maintaining workloads on-premises. For example, private clouds can be used to support legacy applications, meet cost requirements, and comply with data sovereignty regulations. Therefore, as organizations explore cloud technologies, it is important to consider a cloud optimization methodology to bring together the best capabilities across platforms for optimal business results.
Increased Business Agility
The globalization of financial markets has enabled financial institutions to service clients around the world. This has resulted in extraordinary benefits for the industry but has also strained the technology and firms that underpin the global economy. As a result, increased transaction volumes and rapidly changing customer demands require financial institutions to seek new methods for increasing business agility and meeting their customer needs.
One benefit of cloud computing is that it allows companies to scale applications across nodes or seamlessly increase their access to compute. The net result is that financial institutions can be more dynamic and satisfy spikes in customer demands. This practice has been adopted by many financial services institutions for specialized workloads and was highlighted in a keynote by J.P. Morgan.
Everything we do [at J.P. Morgan] is at tremendous scale. Working with Amazon Web Services allows us to scale massive volumes so we can innovate to stay ahead of our competitors.2
Cloud computing also helps companies architect their services to reduce the impact of data center disruptions and improve their business resilience. With the rise in cloud-native technology, enterprise applications have become increasingly independent, enabling financial institutions to update, scale, and react to a single failure without impacting other services. Companies can take advantage of this resilience during disruptions due to unforeseen activities such as widespread outages or natural disasters.
Unlocking New Capabilities and Services
Strong industry competition has also created new use cases for innovative technologies across artificial intelligence (AI), analytics, and security. Whether companies are seeking to modernize their infrastructure or improve customer experience, the public cloud can improve their time to market and enable access to specialized services.
For example, enterprises can leverage cloud computing to accelerate the deployment of artificial intelligence technology. The increased application of AI in financial services enables FIs to streamline core business processes or add new services that improve the customer experience. This practice was best demonstrated by Nationwide Building Society, which is one of the largest savings providers in the United Kingdom (UK). By deploying AI in the cloud, Nationwide was able to accelerate their Know Your Customer (KYC) checks and deliver better service to customers while achieving cost savings.
Financial institutions also leverage the public cloud to augment their security capabilities. Evolving global data protection laws and cyber threats have led companies to rethink how they’re handling consumer data. As a result, companies are turning to confidential computing, which can preserve the privacy of sensitive workloads yet enable sharing and analysis of data between parties. This is best demonstrated by the Swiss Re Group, one of the world’s largest reinsurance providers, which used confidential computing to improve their risk analysis calculation while maintaining consumer privacy.
Cloud Optimization Strategy
Despite the benefits of the public cloud, some workloads may be too unique, sensitive, or expensive to migrate outside the data center. In fact, workloads may be required to remain on-premises because of data sovereignty regulations within certain regions. As a result, companies must develop a cloud optimization strategy to make efficient workload placement decisions that meet industry requirements while controlling costs.
57 percent of banks already run in hybrid cloud environments.3
While digital transformation has modernized aspects of the financial services industry, there are still many areas where on-premises infrastructure is predominant. One example is core business systems and applications that are central to daily financial services operations and remain mostly on-premises. For decades, FIs have declined to modernize their core systems because of the risk of impacting their business in an industry well known for being conservative. Additionally, FIs are experiencing a shortage of talent to help migrate their legacy systems and applications to newer technologies.
There are also many circumstances in which on-premises deployments can be more cost-effective than the public cloud. This is especially true for companies that are deploying stable, high-volume workloads for an indefinite length of time. Additionally, companies that migrate to the public cloud may experience sunk costs if they already have on-premises data centers. Thus, there are circumstances in which deploying capabilities in house can save FIs money by customizing and managing utilization in a hybrid cloud environment. For example, the usage cost in the public cloud can become significantly high if a company’s workloads are running 24/7 and require a large number of servers.
The financial services industry is subject to unique regulations relating to managing financial risk, reducing financial crime, and handling customer data. As a result, companies conducting business in certain regions may be prohibited from transferring their data to a third-party cloud provider for storage or processing. One example is the General Data Protection Regulation (GPDR) that imposes obligations onto organizations that target or collect data related to people from the European Union (EU). This law, among others, requires companies to proactively design their data architecture to ensure alignment with local policies.
Legacy Infrastructure and Applications
Digital transformation is upleveling the financial services industry; however, after years of underinvestment in core technology systems and applications, core legacy systems are not optimized to take advantage of new solutions. There is a lack of visibility into the total cost of operations as well as internal silos and organizational challenges that create inconsistencies between different infrastructure platforms and systems.
Additionally, maintaining and operating legacy systems becomes increasingly difficult and expensive over time as there are fewer IT experts who know how to support them. Simultaneously, modernizing legacy infrastructure could impact system-wide operations. In such cases, it can be preferable to keep legacy systems on-premises.
Therefore, it is beneficial for companies to consider a hybrid cloud infrastructure based on their specific needs. For example, Tebon Securities used Intel® technologies to support launching their on-premises private cloud to remove agility barriers as well as ensure fast response to marketplace changes and new opportunities for a competitive edge.
Intel Continues to Innovate Cloud Technologies
Regardless of the deployment model, Intel® technologies have remained at the center of the industry’s cloud transformation. The Intel® comprehensive cloud technologies portfolio is supported by a broad industry ecosystem of partners, including cloud service providers (CSPs), independent software vendors (ISVs), and managed service providers (MSPs). Intel also has hands-on experience working with and advising end customers on how to solve their most complex technical challenges and optimize their services across the public, private, and hybrid cloud infrastructure.
Two Decades of Public Cloud Innovation
As it relates to the public cloud, Intel has more than two decades of practical innovation in delivering technology that meets the needs of the cloud industry. In the early 2000s, Intel began embedding Intel® Virtualization Technology in its platforms, which accelerated virtualization and jump-started what is now the cloud. Further innovation included Intel’s work to coengineer custom central processing units (CPUs) for CSPs, which yielded the hyperscale cloud used today.
Intel has also invested significantly in cultivating ecosystem partnerships with commercial independent software vendors, cloud service and open source providers, value-added resellers, and system integrators to optimize Intel-powered cloud solutions. For example, Intel works with recognized leaders like Red Hat and VMware to ensure that Intel® technologies are optimized for enterprise cloud use cases.
As a technology leader committed to creating the future of the cloud revolution, Intel is now one of the world’s largest contributors to the open source community and plays a leading role in a cross-industry effort called the Confidential Computing Consortium to support advancements in data security.
In addition to helping establish the cloud industry, Intel has worked diligently to ensure that Intel® technologies are optimized for enterprise use cases. For instance, 3rd Gen Intel® Xeon® Scalable processors support hybrid cloud infrastructure and operations for the most demanding applications, including artificial intelligence, in-memory analytics, and high performance computing (HPC).
In terms of optimizing CPU performance, Intel delivers differentiated performance and improved security for hybrid cloud infrastructures. For example, Intel® AVX-512and Vector Neural Network Instructions (VNNI) are both built in to deliver accelerated performance for taxing workloads and AI computations. Additionally, Intel® Software Guard Extensions (Intel® SGX) enables application isolation and security of encrypted data to maximize enterprise security.
End Customer Engagements
Intel has been working with financial services companies for decades to help address their most complex challenges. As a leading technology innovator, Intel serves as a trusted partner to financial institutions interested in deploying hybrid cloud technologies within their organizations. This experience is critical to ensuring that FIs have the tools and resources to compete globally.