The cloud has become an important part of the banking landscape, with an increasing number of banks migrating to it to reap the benefits. However, neither a private nor a public cloud can fully meet the unique needs of financial institutions. The journey to cloud adoption for banking and insurance service providers cannot be completed unless the complexities of core business systems are addressed.
While many BFSI enterprises are able to migrate their corporate support systems like ERP systems such as SAP or CRM and the common IT security and infrastructure support systems, yet core systems are still far from being considered for cloud migration due to multiple challenges such as industry specific security and compliance requirements, legacy nature of technologies and platforms, country-specific regulations, low to ultra-low latency application requirements, and so on.
BFSI enterprises will be unable to realize the full cloud potential unless their core business systems are capable of fully leveraging cloud platforms and service capabilities.
What role will hybrid cloud solutions play in addressing core system challenges?
BFSI enterprises require a hybrid integrated solution for core systems to access cloud services from their respective data centers via shared infrastructure provided by cloud providers, allowing enterprises to deploy applications on either the cloud shared infrastructure or their own datacenters without rewriting the code. Enterprises will be able to run applications directly on the cloud or on-premises compute and storage using the same APIs.
To provide a consistent operational experience across on-premises and cloud environments, the on-premises cloud solution is linked to the region of the nearest cloud service provider, and cloud service providers should manage cloud infrastructure, services, and updates.
Use Cases – Where BFSI enterprises can use hybrid cloud solution as service
Below are key use cases for hybrid cloud solutions within BFSI industry
- A hybrid cloud computing approach allows enterprises to keep certain applications such as low-latency applications or those with data residency concerns on-premises without rewrite.
- Enterprises in the financial services industry that use appliance-based databases for high performance and high availability computing will be able to leverage hybrid cloud services solutions in data centres.
- Migration of databases from proprietary and expansive operating systems and hardware to more cost-effective and economical hardware options provided by cloud providers.
- Commercial off-the-shelf BFSI products that require high-performance servers, can be easily migrated to lower total cost of ownership.
- Monolithic core applications that require reengineering should be moved to these solutions first and then incrementally modernised on the public cloud.
- Legacy monolithic core applications that require reengineering should be moved to these solutions first and then incrementally modernized on the public cloud as a strategy.
Hybrid cloud as a service – Solution choices from leading cloud solution service providers
All major cloud providers offer highly integrated hybrid cloud as services choices to enable cloud services previously only available on shared infrastructure to be on dedicated hardware in a company’s data centre, branch offices, or other facilities. These integrated cloud solutions deliver seamless public cloud services to enterprises’ existing data centres. These are managed cloud services that include compute, storage, and other features that allow enterprises to be closer to the data centre, as BFSI core systems require significant low latency, as well as an ecosystem of business applications that reside on-premises data centres. We will look into one by one, what are the various popular solution options are available from hyperscalers.
- AWS Outpost – AWS Outposts is the company’s first fully managed hybrid cloud solution. A fully managed service in which AWS delivers pre-configured hardware and software to the enterprise’s on-premises data center or co-location space to run cloud-native applications without requiring the enterprise to operate out of AWS data centres. AWS Outposts offered two options for workload execution: run VMware cloud on AWS or run compute and storage on-premises using the same native AWS APIs used in the AWS cloud.
- Azure Stack – Azure Stack, also known as Azure Stack hub, provides a set of core services to customers’ own data centres, including virtual machines, storage, networking, VPN gateway, and load balancing, as well as platform services such as functions, containers, and databases, and identity services such as active directory. The Azure Stack can be run on hardware from a number of partners, including HPE, Dell EMC, Cisco, Huawei, and Lenovo.
- Google Anthos – Anthos enables applications to run on-premises, in the Google Cloud, and, crucially, with other major public cloud providers such as Microsoft Azure and Amazon Web Services (AWS). Anthos is a hybrid Kubernetes deployment that combines Google’s Kubernetes Engine (GKE), GKE On-Prem, and the Anthos Config Management console for unified administration, policies, and security. It is hardware independent and can run on existing enterprise servers as well as VMware, Dell EMC, HPE, Intel, and Lenovo racks.
- Oracle Cloud at customer – Customer service with Oracle cloud brings cloud infrastructure and platform services such as database, big data, and app development, as well as software-as-a-service (SaaS) applications such as customer relationship management (CRM), enterprise resource planning (ERP) ), and human capital management (HCM) into customers’ own data centers. Oracle provides customers with converged Oracle hardware, software-defined storage, and management services to run applications. The company simply requests data center floor space, networking, and power before deploying everything on-premises and managing cloud services, including regular upgrades. While Oracle Cloud at Center cannot directly compete with AWS outpost, Azure stake hub, and Anthos, it is a popular option among BFSI enterprises that have previously used on-premises Oracle products such as Exa-data or CRM products.
All of the above mentioned solutions are very popular and can be considered to build private cloud space and come packed with built-in support services, thus posing fewer challenges for enterprises that deploy them. Based on enterprise cloud strategy, roadmap and fitment one can chose any of the above mentioned or alternative solution for implementing hybrid cloud solution. Comparing these solutions and recommending any specific solution for adoption is beyond the scope of this article.
Hybrid cloud solution as a service is the way forward for BFSI enterprises
BFSI enterprises that are currently using very expansive appliance-based core systems running on proprietary vendor-provided operating systems and hardware, core systems with data protection requirements or systems requiring ultra-low latency performance requirements should consider adopting hybrid cloud services at their own data centers to lay the foundation of cloud services for core systems and gradually migrate to the public cloud over the time while maintaining core application dependencies.