How do I leverage Cloud technology to drive innovation? | Financial Services Blog | Deloitte Australia has been saved
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Step Three: Create a new baseline for your business
Q - Today many financial institutions use Cloud-based applications for business processes that might be considered non-core, such as CRM, HR and financial accounting.
As we move into 2021, what are the baseline elements of Cloud technology that all FSI businesses should be utilising for greater innovation?
During the last ten years of large-scale digital transformation, many organisations have fallen into the position of having multiple Cloud environments which often incur dual running costs and more complexity than they started with. They might have started with one Cloud provider then had some software at end of support and moved to another provider, then bought more Cloud software — and quickly they have a complex web of applications for their data.
Performing an audit of existing applications can help organisations when they get to this level of complexity. One approach to this is a ‘purpose alignment model’ where you plot your portfolio of applications onto a two-axis graph. On the x-axis is ‘mission-critical’ and on the y-axis is ‘differentiating’ or ‘business value-creating’. It quickly becomes clear what the capabilities are that are going to be fit for purpose for the applications of tomorrow, and what is going to be obsolete.
Applications that are identified as highly critical but non-differentiating need to be optimised for availability in risk and cost. Applications that are identified as low criticality and non-differentiating need to be optimised for cost and risk. These applications tend to be commodities that aren’t related to an organisation's core business.
There are very few applications that are highly differentiating and highly critical — these tend to be the ones that need to be optimised for velocity, and agility foremost and secondarily availability and risk. The highly differentiating low criticality space are generally the experimentation applications that need to be optimised for agility.
Consider an organisation’s HR platform, for example. There’s no doubt that it is highly critical — but it’s unlikely that it’s highly differentiating (unless you are in a people services business). For financial services organisations, it’s better to consider software as a service in order to maximise the return benefit on your outlay.
For applications in the top right quadrant (highly differentiating), it’s imperative to consider all the attributes of the modern Cloud-based applications and the value they can add. These are elements like supply risk, Kubernetes, configurability, observability, secure by default controls and fate-sharing. It may be valuable to consider a ‘platform as a service’ approach that offers capabilities like artificial intelligence, machine learning, or anthos.
At a higher level, organisations need to think about how they manage their Cloud journey in a way that ensures that the money spent maximises the benefit from the value of those applications.
Step Four: Utilise blockchain
It has been said that blockchain will be as significant to the future of banking as the Internet was to physical stores. How can Cloud Solutions best prepare for this change?
Blockchain is a distributed ledger that enables various parties to transact on the same ledger and use that ledger as a source of truth. While it’s possible to have blockchain on-premise without Cloud, Cloud is important for blockchain because of the way it's implemented. Blockchain requires multiple parties from disparate locations to connect and share data across the ledger and with one another. The whole premise of Cloud is removing restrictions on technology to do disruptive things because Cloud is infinitely scalable and incredibly agile.
Although Cloud is not mandatory for blockchain, it will help accelerate its adoption and the adoption of disruptive technologies.
Cloud enables organisations to rapidly adopt disruptive technology like blockchain because they can experiment with these technologies with a low failure cost. They can spin off a whole environment to run a blockchain proof of concept, and if the business tries to adopt it and it doesn’t work, then they just turn it all off and can move on.
Whereas before Cloud, they would need to build that environment from scratch and invest in physical infrastructure to make it happen. It would require installation, configuration, patches, maintenance and more at a comparatively high cost and higher risk.
So Cloud enables blockchain solutions to be simply consumed as a service.
With changing consumer behaviours, advances in fintech and an evolving regulatory landscape it’s easy for financial service organisations to be left behind by being stymied by dated and underperforming IT infrastructure.
Leveraging Cloud platforms and partners to drive innovation is a smart move. Organisations need to be proactive in working with regulators to ensure compliance. They need to understand where the value of their IT systems originate and what is falling short by reviewing their legacy platforms. Then they must form a carefully considered Cloud strategy that is fit for purpose for the challenges of the future.
Matt Pancino is the Industry Solutions Lead for Financial Services at Google for APAC. He is experienced in leading organisations through large scale technology transformations that enable business growth.
Shane Lyell is a Director within Deloitte’s Cloud Engineering business, based in Victoria. He works with a number of large financial institutions to accelerate business growth through the adoption of innovative cloud solutions.
James Allan leads Deloitte's Cloud Engineering business for Victoria with over 70 talented engineers working across a variety of technologies to deliver meaningful business transformation to a broad range of clients. He also holds various geographic roles, including leading Deloitte's alliance with Google Cloud across Asia-Pacific and acting as the global lead for Deloitte's Cloud Strategy and Transformation offering.
James is a Partner and Google Lead Alliance Partner in Deloitte’s Consulting practice. He has played an instrumental role in the development and leadership of the firm’s Cloud and Infrastructure team. Several years ago, he had a vision to have a more focused technical team in the IT infrastructure space, as a catalyst to technology transformation work. James has been successful in leveraging the intersection of the team’s deep technical capabilities, and an understanding of client issues.