The transition from legacy to cloud within financial services

The adoption of hybrid cloud has boomed in popularity over the last decade but has accelerated even further during the last 12 months as a result of the global pandemic. Overnight, businesses found themselves having to quickly facilitate a remote workforce, and on-premises legacy systems were simply not going to be adequate. In fact, according to a recent survey by IDC, 85 per cent of C-suite executives surveyed in the UAE are pursuing or planning to implement hybrid cloud strategies in their organisations. Businesses, and especially those in financial services, are embracing hybrid cloud for all its benefits of low cost, easy maintenance, flexibility, speed of deployment and security. And, as banks and financial institutions (BFIs) look to establish some form of normality post lockdown, hybrid cloud is here to stay.

However, the transition from legacy to cloud based systems can be challenging. When managed improperly, hybrid cloud can cause IT teams to lose visibility and control over their application performance and network. This results in increased complexity and fragmentation, and it can have a detrimental impact on employee productivity, not to mention the huge financial and reputational losses that can result if a bank experiences a server outage. As those in the financial sector continue to transition to hybrid cloud models, these challenges, and how they can be overcome, must be kept front of mind.

Before delving into how best to manage the transition from legacy to cloud based systems, it is first important to understand exactly why financial institutions are increasingly making this shift.

The drivers behind hybrid cloud

Triggered by the disruption to traditional, physical banking as a direct result of Covid-19, there has been exponential growth in the number of users towards online applications and alternatives. For example, as reported by Deloitte, 20 per cent of all retail banking customers have used at least one online service for the first time during the crisis. The legacy infrastructure that was in place to handle users typically coming into the physical banks was too outdated to cope with the uptick in mobile or online banking. This is primarily due to legacy systems suffering from latency and bandwidth issues as users flooded the servers. Without making the transition to hybrid cloud systems – that could better handle the influx of online and mobile users – financial institutions risked delivering an inefficient and ineffective service to their customers.

Another key driver for banks shifting to hybrid cloud is that traditional banks are increasingly facing competition from digital-native challengers like Liv, Mashreq Neo, and most recently Zand. Unlike the banks and institutions based on legacy systems, these players can swiftly adapt, innovate and deploy new services to meet customer and user expectations. And the reality is, these players are not going away. There has also been a significant shift in the market to target millennial and GenZ customers who expect on-demand banking and accelerated levels of service speed. For the traditional financial players to keep a-pace, it is vital that they quickly start the shift to hybrid and cloud-based models. In doing so, these banks can more easily adapt to customer demand, quickly bring new services to market and truly stay ahead of the competition.

The need for visibility

The transition from legacy to cloud systems is here for the long term, and, as evidenced above, it is proving to be a necessity for financial institutions. It is therefore imperative that financial organisations consider how the change will impact their operation teams’ control and visibility for their hybrid cloud strategy to succeed. This is especially true when one in three IT decision makers lack full visibility into their applications, networks and end-users, according to Riverbed’s Rethink Possible report. Without the right level of visibility as the move is made from legacy- to cloud-based systems, IT teams are forced to operate blindly. Subsequently, this seriously impacts their ability to determine if the hybrid cloud is working properly and to rectify any issues.

For example, just because the uptime is high, it doesn’t mean the network or application is working effectively. It could well be the case that application performance is so poor it is essentially unusable. However, it is impossible for IT teams within banks to know this unless they can gain full visibility over the network and application suite. In doing so, these teams are then able to monitor for inconsistencies or abnormalities, fixing any issues before they impact the user experience. If financial enterprises, particularly the more traditional banks based on legacy systems, are to deliver the best customer experience, these issues must be resolved by investing in the right technology.

Application acceleration and performance management – areas to invest

To ascertain whether a hybrid cloud model is performing the way it is expected and ensure that banks can provide the service and experience demanded, IT teams within financial institutions need solutions that facilitate end-to-end visibility. This is where network performance management tools come into play, allowing for performance issues to be monitored and scrutinised in real-time. This enables financial institutions to detect and overcome any challenges, including identifying where latency is at an unsatisfactory level and application accelerators could remediate the problem.

For example, this could involve pinpointing if a file containing financial models is uploading on Office 365 at a painfully slow rate that is prohibiting efficient communication and implementing a SaaS acceleration solution to resolve this. When used in collaboration, these solutions empower IT teams to deliver the optimum performance possible throughout the transition from legacy to cloud systems. As a result, end-users undergo minimal disruption and can have an enhanced digital experience. All of this can have a direct advantage in helping to bring back the growth, innovation and success of the wider business.

Cloud is here to stay, so adapt now

The increasing use of online banking services and the rise of cloud-based challenger banks are here to stay. It is therefore paramount for traditional financial institutions to tap into the benefits of hybrid cloud and deliver a next-generation customer experience to remain competitive. However, making this transition from legacy to cloud systems can cause IT teams to lose the much-needed visibility required for strong performance and business efficiency.

It is for this reason that it’s imperative for the operations teams to be equipped with performance management and application acceleration solutions, ensuring they can then detect, analyse and rectify any performance issues. Ultimately, investing into these tools will empower financial institutions to be agile, innovative and to develop and deploy new services to stay ahead of the competition and keep the business on track to success.

Mena Migally, regional vice president, META at Riverbed Technology