It’s fair to say that “cloud” is certainly becoming the new normal within banking – most, if not all, of the industry are considering cloud in one form or another. Whilst many initially focused on utilising the public hyperscalers as a means to reducing the cost of their IT infrastructure spend, they very quickly realised this isn’t the outcome most achieve. Others also made bold statements around moving 100% of services to public hyperscalers; again, it was quickly realised this isn’t as easy, nor may it bring as many benefits as first thought.
The move to cloud is no longer being viewed as a means to move existing virtual machines from an on-premise environment to a public hyperscaler. Its accepted that the adoption of cloud, whether purely with the public hyperscalers, or more typically in a hybrid cloud model, utilising a mix of private cloud capabilities and multiple public hyperscalers is more focused on agility and speed of delivering change - whether as a FinTech with no legacy, or an incumbent enterprise. Indeed, in this year’s Enterprise Cloud Index report, it was reported that financial services outpaced all other industries in the adoption of hybrid cloud reaching 21% penetration today, compared to a global average of 18%.
Banks are looking to use a hybrid approach for a myriad of reasons. First and foremost, it will be concerns around cyber-security, regulation and data sovereignty. Ensuring that data placement meets the requirements of the geography they are operating in. But it is also about performance; this could be low latency high frequency trade environments, where the data needs to be “near” the trader, or it could be keeping data near where it is consumed within a retail bank distribution channel to ensure access by the end user is as performant as possible.
Critical to any cloud journey is achieving the right mix of service placement across the full hybrid and multi cloud model. At HPE, our Pointnext Services utilise the HPE Right Mix Advisor to deliver a data-driven approach to help organisations develop their hybrid cloud strategies and to understand where best to place workloads and applications according to the individual organisational needs and drivers. 
Capital Markets firms were, as they typically are when it comes to shifts in technology, early adopters of hybrid cloud for very specific workloads – typically research, CRM or analytical focused activities. Retail Banks, whilst initially slow to make headway with cloud adoption, are catching up. In particular, it is being used as the means for which to help become digital – not just around the adoption of technology, but around changing the mindset of an organisation. However, just utilising hybrid cloud services will not make a bank a true digital organisation. To do that a “digital mindset" must be adopted – this is where data is leveraged at the heart of the organisation in realtime to deliver actionable insight. Practices such as DevOps (or DevSecOps) and agile are adopted, allowed functional changed to be released daily rather than in quarterly release cycles.
The cloud like experience organisations expect in a hybrid cloud world is truly exploited when services are re-architected to take advantage of composable services, truly leveraging infrastructure as code; being able to spin up / tear down services as required. This, coupled with the ability to consume cloud economics whether on premise or via a hyperscaler, will enable banking clients to transform how services are delivered and ultimately deliver better services to their end customers.
Whilst all of this transformation is taking place it is key that risk is managed; not just from a cyber security perspective, but around operational delivery. Banks typically have very mature service delivery runbooks encompassing planning, capacity management, change etc, which have developed over time and are often aligned to industry standard processes such as ITIL. As we enter the hybrid world, these need to evolve to take into account the change in service delivery as well as the underlying architecture underpinning services – the move to site reliability engineering, the organisational change needed across every part of the technology organisation, better understanding the concentration risk of deployed services. How the culture needs to change to embrace new ways of working.
To conclude, more and more banks are talking publicly about what they are doing in the hybrid cloud space; they are getting confidence both to look to change, but also to talk about their experiences. However, we must not forget that moving to a hybrid cloud model is not the ultimate outcome – it is about enabling what the business is overall trying to achieve.
Chris Ibbitson
Hewlett Packard Enterprise
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Chris is a Chief Technologist for HPE, focused on the Financial Services industry. Before joining HPE, Chris has worked at both a Global Systems Integrator, as well as at a Global Bank in a variety of senior architectural roles.
