Accelerating digital banking transformation with cloud technology In briefBy 2025, core banking workload deployment on cloud is expected to be 14% of total IT spend.Banks are grappling with outdated applications; data is siloed and trapped within legacy systems and not accessible for customer insights and tailored experiences and services.Regulatory changes in Australia, the UK and U.S., in GDPR and APRA standards for data privacy and operational resiliency, are also impacting the financial sector and can be directly mitigated with the security, resilience and scalability of cloud technologiesProtiviti Managing Directors David Kissane, Global Leader of Enterprise Cloud, and Alex Setchin with Enterprise Cloud in Australia, sat down with Joe Kornik, Editor-in-Chief of VISION by Protiviti, to discuss the future of banking and investment priorities they are seeing in the financial services industry, including insights from Gartner’s Future of Cloud Computing in 2027: From Technology to Business Innovation. Kissane and Setchin also share some of the ways Protiviti is helping business leaders strategically address digital banking transformation with cloud technologies. Topics Digital Transformation Cloud Technology Enablement Industries Technology, Media and Telecommunications Banking and Capital Markets Kornik: What global trends are you seeing right now across the landscape of financial institutions?Kissane: Globally, financial institutions are actively transforming and moving mission-critical workloads to cloud, and legacy technology spend is declining dramatically year over year, with a 47% decline expected in 2023, according to Gartner. These numbers don’t surprise me, and I can confirm we are seeing this across Australia, Asia-Pacific and the U.S. regions. IT leaders are actively migrating workloads off legacy infrastructure, while some also are in the process of modernising mission-critical workloads on cloud-native platforms for improved resiliency, reliability and scalability.Kornik: And what do you think is driving this change?Kissane: We can see a broader trend of an accelerated pace of core banking and mission-critical application migration and transformation. Again, according to Gartner, by 2025 cloud banking workloads is expected to account for 14% of the total IT spend. There are multiple contributing factors here. First, the long tail of legacy applications and data is continuing to accumulate and requires attention. Second, IT spending on data centres is decreasing dramatically year over year as financial institutions actively exit capital expenditure-heavy and self-managed data centre facilities and migrate workloads to the private and public cloud.This, of course, has a positive impact on mission-critical application resiliency, availability and scalability and unlocks capacity for the business and IT teams to focus on strategic initiatives that drive value for the business. Currently, a majority of the migrated workloads are non-mission-critical, but I see mission-critical applications accelerating in the coming years. Furthermore, many of the financial institutions in advanced stages of cloud migration and are launching modernisation initiatives to drive further cost efficiencies, simplification and digitalisation of customer and back-office processes on cloud native-solutions and SaaS platforms. Legacy technology spend is declining dramatically year over year, with a 47% decline expected in 2023, according to Gartner. Kornik: The complexity of the operating environment of financial institutions is arguably greater today, with ongoing regulatory changes both a complicating factor and a reflection of this growing complexity. How do you see these changes mitigated by cloud adoption and transformation by financial institutions globally?Setchin: The regulatory landscape is top of mind for financial institutions, and it is shaped by several macro factors such as economic environment instability, rising customer expectations, digitalisation of financial assets, ESG mandates, financial crime, operational resiliency and strategic agility. Globally, regulators and policymakers prescribe how financial institutions engage with cloud service providers through robust outsourcing arrangements, governance and operating models. There is some emphasis on having effective multi-cloud models and exit strategies for transitioning major infrastructure and cloud services between vendors.Cloud concentration and lock-in and third-party IT risks are also some of the key regulatory callouts in terms of principles and guidelines. Operational and cloud resilience is another priority for financial institutions and underscores the need for resilience controls and response mechanisms to outages from external factors such as cyberattacks. Financial institutions need to engage continuously and proactively with their regulators and policymakers, to be at the forefront of emerging regulatory frameworks globally as they enable their business agility and risk mitigation with cloud platforms and services.Kornik: Finally, how do you see financial institutions approaching cloud transformation and digitalisation? Any advice for business leaders?Setchin: Cloud should be a strategic enabler of business change and digitalisation and can help increase the speed to market, resiliency and scalability for financial institutions. There are seven strategic pieces of advice I’d share when it comes to cloud transformation and adoption by financial institutions:Set a clear vision and strategy for the cloud transformation with a focus on business outcomes enabling business objectives. Communicate the cloud transformation vision to all business and technology stakeholders and link transformation drivers back to customer outcomes.Be clear on the process- and people-change impacts and how business and technology teams will effectively communicate all changes.Set the right governance structure for the transformation with business, technology and customer stakeholder representation.Transform the technology landscape with cloud technologies so it’s sustainable for the future. The underlying cloud platform, systems, integration and data need to be simplified to reap the benefits.Define a delivery model that leverages internal expertise and, if needed, external technology expertise to ensure transformation outcomes are achieved. Set realistic targets.Execute on the transformation plan and deliver to all process and people change objectives, ensuring proper transitioning, knowledge transfer and upskilling of business and technology teams at the end of the program.Track benefit realisation every step of the way, being sure to quantify even incremental benefits.For more insights on the Future of Money, please visit: https://vision.protiviti.com/ Cloud concentration and lock-in and third-party it risks are some of the key regulatory callouts in terms of principles and guidelines. Find out more about our solutions: Enterprise Cloud Consulting Services Protiviti’s cloud consulting services help organisations implement and adopt cloud capabilities that align with defined business outcomes, including cost savings, agility, scalability and innovation. Banking and Capital Markets Consulting Protiviti's banking consulting helps financial institutions to be more effective and efficient in a way that is risk-sensitive, regulatory compliant, well-controlled, and enabled by leading technologies. Finance Technology & Data Align strategic finance initiatives and technology with business priorities and growth plans to help finance leaders realise efficiency, grow securely, and mine better data. Leadership David Kissane David is a managing director and Protiviti’s global enterprise cloud solution lead. His primary focus is driving the growth and implementation of our cloud services across the globe. David has over 22 years’ experience across a variety of industries and senior IT ... Learn More Leslie Howatt Leslie is a managing director, and Protiviti’s technology consulting solution lead. She specialises in digital and technology strategy as well as transformational change with over 25 years’ experience across consulting, industry, and government sectors. She has ... Learn More Krishnan Venkatraman Krishnan is a director with over 14 years’ experience in professional services. He has specific expertise in technology risk consulting and has been advising clients both in the public and private sector in designing and implementing information security controls.Major ... Learn More Tim Speelman Tim is a director with a track record of developing and implementing strategic plans that align with the demands and gaps of global and local enterprises. Before joining Protiviti, Tim was a regional CISO responsible for APAC within a large recruitment company with core ... Learn More Hanneke Catts Hanneke is a director in Sydney with over 15 years’ experience focusing on technology consulting, including privacy, technology risk, project management and assurance, IT controls and security compliance, enterprise risk management, and internal audit and regulatory ... Learn More Featured insights WHITEPAPER Building Resilience in the Cloud In 2019, AFME published its first paper on the adoption of public cloud in capital markets[1]. Since then, the adoption of cloud has continued to progress, along with focus from policymakers and regulators.Though the use of cloud and Cloud Service... BLOGS Still not operating in the cloud? Things to know for a seamless cloud migration Over the last number of years, we have seen organisations shift to cloud computing, in its various forms. Successful adoption and consumption of cloud services have seen organisations benefit from improved cost-effectiveness, security, agility,... 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