The term “banking” did not exist before 1640, but safe-keeping and saving were common practices in the Babylonian temple as early as 2000 B.C. Empires required a mechanism to pay for foreign products and services with something that could be easily exchanged, and this is when banking first emerged. Over time, flimsy, transient paper bills gave way to coins of different sizes and metals. Continuing to advance, banking has moved from coins to digital money and transactions.
When did you last go to the bank to get your passbook printed with your latest transactions! Questioning your memory, right?
The entire digital banking process can be accessed with just a click by end-users. It should be no surprise that this sector generates data at every stage. Even a little activity like going to an ATM nearby to withdraw cash or paying a vendor you bought ice cream from produces significant data in today’s digital era. Digitalization is being applied to even the smallest banking services, demonstrating the industry’s resilience in difficult times, such as COVID-19.
The hybrid cloud is strengthening data management in the financial services sector
Banks deal with a large amount of sensitive data compared to other industries. When managing the massive amount of data generated every second, banker and financial institutions must think clearly about whether to keep it on a public or private cloud.
Recent years have seen a rise in the adoption of hybrid clouds for data management by well-known banks. Banco Santander has partnered with Microsoft Azure to advance its cloud strategy, and Paris-based bank Societe Generale has sought the help of both Microsoft and Amazon to become one of the first major European banks to use cloud computing for most of its operations. According to Nutanix’s third annual Enterprise Cloud Index research for financial services, hybrid cloud is the only I.T. model among financial businesses growing positively and is predicted to increase by 39% over the next five years.
The hybrid cloud offers consumers the best of both worlds by combining the public cloud’s flexibility and scalability with the private cloud’s security and control. By implementing a hybrid cloud solution, banks can use the public cloud during periods of high demand while the private cloud secures sensitive financial information. This gives them the versatility and scalability to respond to changing market conditions and customer demands.
Hybrid cloud: 4 ways for the banking sector to save money
In unprecedented times when the world is preparing for a recession, hybrid clouds provide many capabilities, including scalability, unlimited computing power, pay-as-you-go, and steep discounts for multiyear contracts. At the onset, it is not just a digital investment, but a long-term strategy that can help financial service providers optimize their costs and enhance the bottom line.
Here are four reasons why the hybrid cloud can help reduce costs and be recession-proof in the banking sector.
- Smart storage of data: Through content and context analysis, the sprawl of unstructured data can be classified as sensitive and not sensitive, cold and hot, and data that is redundant, obsolete, and trivial (ROT). Following this data classification, the banking sector may keep sensitive data on-site or in private clouds. At the same time, cold data may be stored in public clouds in cold storage, where backup and archive tiers offer affordable long-term data storage. In the banking industry, retention requirements can reach up to 10 years. Cold storage in the cloud is more affordable and efficient and offers an infinitely expandable capacity to keep cold data for as long as necessary.
- Low initial investment – Cloud products frequently offer pay-as-you-go pricing. This format provides flexibility and savings in several different ways. First and foremost, your business is not required to pay for storage that isn’t being used. Cloud software often only charges per user instead of an upfront licensing. The pay-as-you-go features provided by cloud providers can also be canceled anytime, lowering unnecessary costs that ultimately impact the bottom line.
- Reduction in operating costs: Company-owned data centers are common in many industries to handle peak loads. These massive data centers have costs associated with the workforce required for setting up, maintaining, and updating the systems. On-premises data centers incur additional costs due to the energy they consume and the space they need to set up. In contrast, the costs offered by major public cloud providers are only applicable to resources utilized. In addition, the cloud does not require an extensive in-house workforce as your cloud provider manages it. It offers flexible pricing models, such as pay-as-you-go, allowing enterprises to scale up and down according to their requirements and pay as they need.
However, moving an unsupervised large volume of unstructured data to a public cloud can result in high costs and security risks. Consequently, a private-only or public-only cloud strategy cannot address the efficient data management and storage requirements on its own. In such circumstances, the value of a hybrid cloud becomes apparent. By balancing the trade-offs, a hybrid cloud enables you to use the advantages of both the public and private cloud platforms. With the flexibility and scalability of the public cloud and the security of the private cloud, a hybrid cloud is the ideal cloud strategy for banks. If the bank’s workload surpasses specific criteria, it can utilize compute capacity of the public cloud (cloud bursting capability). - Introduction of new hardware and software: As technology advances, the banking industry must continue to invest in the newest hardware and software to update its IT infrastructure. With the hybrid cloud strategy, this becomes significantly more affordable. Modern apps can be put into use in a way that is both quicker and more cost-effective. Automatic updates happen while the program is running, keeping enterprises up to date at all times. Additionally, businesses can initially test and implement a new application via the public cloud for relatively low initial costs when market demands dictate it. Once the new application has proven to be successful with respect to business demands, it can be moved to a private cloud so that it can be further customized.
Microsoft Azure: A hyperscaler that operates in parallel worlds – both private and public cloud
Microsoft’s hybrid initiative, Azure Stack, is an addition to Azure that aims to bring the flexibility and rapid innovation of cloud computing to on-premises settings. The fundamental idea behind the Azure Stack is to allow businesses to store sensitive data and information in their data centers while still having access to Azure’s public cloud. It is a hybrid platform that offers single sign-on (SSO) in both public and private clouds, a selection of vendors, services, administration tools, and SLA management tools, as well as orchestration of both Azure’s public cloud and Azure Stack’s on-premises deployments. As Microsoft releases new capabilities for developing technologies, it can also adapt and support them, and it can be adaptable and agile to enable that adaptability.
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Enterprises are concerned about migration complexities when moving enterprise data to the cloud. Without adequate planning, migrating data, code, applications, and workloads can result in higher costs and take a lot of time. Therefore, before beginning your relocation adventure, it is essential to evaluate every part of it.
According to Gartner, the hidden cost associated with cloud migration are as follows:
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- Dependency bottlenecks
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