Michael Cooper, BT Radianz Services
The global financial services sector is going through a challenging period of structural change.
Banks are struggling to meet onerous regulatory requirements. They are under pressure to cut costs and make better use of scarce and expensive capital.
On top of this, there is a rising tide of competition upsetting the status quo, and a still difficult macro economic climate.
Technology is so tightly woven into the fabric of financial markets that IT performance is synonymous with business performance.
But aging systems are no longer up to the job, and it's not just IT hardware that can cause problems.
In July this year, 'technical issues' related to a software upgrade took the New York Stock Exchange out of action for nearly four hours.
Regulators are now scrutinising how banks manage their exposure to IT risks. Liability sits with the board and no board likes to be liable for things it cannot control.
In the thick of it
From every angle, the CIO is in the thick of it. He or she needs to respond to emerging new business models but also keep the existing plates spinning. To provide flexibility and choice, but also control risks. There is a real imperative for change but no clean sheet of paper for a big complex transformational programme.
Cloud computing has of course been around for years. The financial services sector has been cautious - sometimes erratic - in its approach to the cloud but now accepts it in principle and can see the business case for its adoption. More than 80% of European financial institutions run at least some business critical applications on private or public clouds, according to research from Ovum. Cloud computing is also the platform that is driving so much disruptive fintech innovation.
Ovum's research also found, however, that one in five users are unhappy with their cloud provider because of poor performance and support. This is disappointing, because cloud services really can help banking CIOs to support more agile business models and migrate legacy systems without losing control. Cloud services can be switched on and off at short notice, helping you to respond quickly to shifts in the market, or expand into a new territory. 'Pay as you go' removes the need for capital expenditure in new hardware and software.
More secure in the cloud than out
Then there is the question of regulation and security. Banks need to know where their data is at all times. Industry clouds such as the BT Radianz Cloud have been built from day one in line with architectural principles that enshrine security. Indeed, many cloud services are more inherently secure than their in-house equivalents. And there is also evidence that regulators are becoming more comfortable with the use of cloud technologies and models.
Banking customers today are more careful about with whom they do business. They want reliability but also convenience and ease of use. However, in a cloud environment, the quality of user experience depends on the network. And there is only one way to guarantee a good user experience: with a single, end-to-end global network that can prioritise applications, manage access to data and optimise traffic.
While a handful of global financial institutions may have such a network, they must also manage a whole smorgasbord of cloud services, integrate them with core systems and manage the risks. It is quite a tall order.
A 'cloud of clouds'
Perhaps too tall, in an industry where no-one can afford to drop the ball. It's not that banking CIOs lack the ability to make it all work together - they simply don't have the capacity to juggle multiple cloud platforms and services and guarantee their performance.
One answer is a 'cloud of clouds' strategy that lets the CIO bring together all those distinct, disconnected cloud services under central management, using a single network that connects every data centre where your cloud applications and data are hosted.
Realistically, the best choice for the banking CIO is to partner with an independent global network provider who also has the connectivity and integration skills that are in such short supply.
With a single trusted network provider as an 'honest broker', financial cloud services can share the most sensitive data securely and give the CIO (and the board and the regulator) confidence that whatever users are doing, they are doing it in full compliance with corporate security policies and regulatory regime.
Such a cloud of clouds strategy can give the CIO control, and enforce good governance while providing flexibility and choice to the rest of the organisation.