The banking and financial industry is becoming increasingly competitive, with institutions constantly seeking ways to enhance their service and reduce costs to meet the evolving market changes and customer expectations. To answer these needs, cloud migration becomes a strategic solution, allowing banks to access scalable resources and innovative technologies through cloud computing without significant upfront investment. 

Let’s delve deeper into the definition of cloud migration in banking, its benefits, and best practices for implementing it.

What is Cloud Migration in Banking?

Cloud migration in banking refers to the process where banks move their operations, data, applications, and services from traditional on-premises infrastructure to cloud computing platforms. This process is part of a broader trend known as digital migration in banking, aiming to enhance operational efficiency, security, and customer experience through digital services. The utilization of cloud computing in banks offers plenty of benefits, ranging from improved data analytics capabilities to enhanced customer experience. 

One of the most significant aspects of banking cloud migration is moving core banking to cloud systems. This includes migrating essential banking functions such as transaction processing and customer account management. By doing so, banks can achieve greater agility in their operations, allowing them to respond promptly to market changes and customer demands.

What are the 7 Types of Cloud Migration?

For banking or financial institutions that consider cloud migration a strategic approach, there are 7 types of cloud migration that are tailored to specific business needs and operational requirements.

• Rehosting: This strategy involves moving banking applications to the cloud with minimal changes. The application runs in a cloud environment just as it did on-premises, making it a straightforward approach for those new to cloud computing.

• Replatforming: This method refers to optimizing the application during the migration process to take advantage of cloud capabilities while keeping the core architecture intact.

• Refactoring: Also known as re-architecting, this strategy involves redesigning the application to utilize cloud-native features fully. This often includes breaking down monolithic applications into microservices, which can enhance performance and scalability but require significant investment in time and resources.

• Repurchasing (Drop and Shop): Also known as drop and shop, this method focuses on replacing an existing application with a cloud-based application, typically through a Software-as-a-Service (SaaS) model. It is commonly used for companies who want to modernize their software stack without managing the underlying infrastructure.

• Retiring: In this strategy, companies identify applications that are no longer needed and decommission them during the migration process. Eliminating unnecessary workloads helps streamline operations and reduce costs.

• Retaining: This strategy involves keeping some applications in on-premises infrastructure due to compliance, performance, or other reasons. It allows companies to selectively migrate only those applications that benefit from being in the cloud.

• Cloud-to-Cloud Migration: This strategy involves moving data and applications between different cloud service providers from one type of cloud environment (like private cloud) to another type (like public cloud). It can be part of a broader strategy for optimizing costs or improving service delivery.

Why Should Banks Move to the Cloud?

Cloud migration is a strategic approach that allows banking or financial institutions to operate more efficiently by leveraging cloud resources. Some of the benefits are:

Costs Savings

One of the main benefits of banking cloud migration is cost savings. By utilizing the cloud, banks can eliminate the need for significant upfront investment in hardware. Most clouds use a pay-as-you-go model, which minimizes operational expenses associated with maintaining on-premises infrastructure. Cloud solutions also reduce the burden on internal IT teams, leading to further cost reductions in maintenance and support.

Improved Scalability

Cloud computing helps banks to scale their resources effortlessly. As banks grow their infrastructure in the cloud, they can scale resources up and down based on demand while serving existing customers. It will come in handy when managing fluctuating workloads due to market changes or regulatory requirements. Banks can also be more agile in responding to customer needs.

High Availability for Improved Customer Service

Cloud services provide customers with access to banking services anytime and anywhere, which is crucial in today’s digital environment. High availability ensures that banking services remain functional all the time, even during component failures. Cloud services can also streamline their processes by automating regular tasks such as updates and backups, which will reduce manual work and errors, contributing to operational efficiency.

Best Practices to Implement Cloud Migration in Banking

To ensure a smooth and successful transition, it’s crucial to follow several best practices in implementing banking cloud migration. These best practices are:

Develop Strategy Early

The first step is developing a comprehensive migration strategy. This is crucial to align stakeholders and manage potential risks during the transition. To do this, banks should examine current systems, applications, and processes to gain a thorough understanding of the current IT environment and workloads. In the strategy, banks can outline the scope, timeline, and resources required for migration to keep it on track.

Determine Suitable Applications for Cloud

Next, a thorough assessment of the banking services and applications will be conducted to determine which ones are suitable for the cloud. Cloud-ready apps include those that are standardized, self-contained, or built using a service-oriented architecture. Some apps, such as highly customized apps, may need lifecycle management, where their existence must be justified periodically.

Select The Right Partner

Working with the right partner is crucial for a successful migration. Banks should select cloud service providers that meet stringent security and compliance standards in the banking industry. Other aspects, such as certifications and experience delivering service for the banking industry, are also important. Banks can establish a clear service-level agreement (SLA) that outlines responsibilities and performance expectations to maintain operational integrity.

Integrate Legacy Systems

Banks often face challenges integrating cloud solutions with legacy systems. A phased integration approach using middleware solutions can facilitate this process, ensuring that critical operations continue smoothly during migration.

IT Outsourcing by PhinCon: End-to-End Solution to Accelerate Cloud Migration

Partnering with a reliable IT outsourcing provider is crucial to ensuring a seamless and efficient transition to the cloud. PhinCon Pte Ltd offers a comprehensive solution for Singaporean banks and financial institutions that need Indonesia’s IT experts to facilitate expansion in Indonesia and move to the cloud environment.

Our established infrastructure in Indonesia, combined with skilled IT professionals, allows us to deliver cost-effective and high-quality services tailored to your unique business needs. From strategic planning and implementation to ongoing maintenance and support, PhinCon provides end-to-end assistance.  Our BPO services, encompassing contact center operations and customer support, free up your internal resources.  Furthermore, our IT talent acquisition services grant you access to Indonesia’s rich pool of IT professionals, ensuring you have the necessary expertise for successful cloud migration and beyond. We will help you scale your operations by managing your recruitment, payroll, benefits, and tax compliance according to Indonesia’s regulations.

Choose PhinCon as your trusted partner and unlock the full potential of cloud technology for your banking operations. For more information about IT outsourcing, email us at sales.sg@phincon.com. 

Editor: Trie Ayu Feminin & Irnadia Fardila